[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 2519 Introduced in Senate (IS)]

<DOC>






114th CONGRESS
  2d Session
                                S. 2519

 To provide for incentives to encourage health insurance coverage, and 
                          for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 9, 2016

Mr. McCain (for himself and Mr. Perdue) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To provide for incentives to encourage health insurance coverage, and 
                          for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Empowering 
Patients First Act of 2015''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Repeal of PPACA and health care-related HCERA provisions.
Sec. 3. No mandate of guaranteed issue or community rating.
   TITLE I--TAX INCENTIVES FOR MAINTAINING HEALTH INSURANCE COVERAGE

          Subtitle A--Tax Credit for Health Insurance Coverage

Sec. 101. Refundable tax credit for health insurance coverage.
Sec. 102. Election of tax credit instead of alternative government or 
                            group plan benefits.
                  Subtitle B--Health Savings Accounts

Sec. 111. Refundable tax credit for health savings account 
                            contributions.
Sec. 112. Allowing HSA rollover to child or parent of account holder.
Sec. 113. Maximum contribution limit to HSA coordinated with retirement 
                            savings account limitation.
Sec. 114. Transfer of required minimum distribution from retirement 
                            plan to health savings account.
Sec. 115. Equivalent bankruptcy protections for health savings accounts 
                            as retirement funds.
Sec. 116. Allow both spouses to make catch-up contributions to the same 
                            HSA account.
Sec. 117. Provisions relating to Medicare.
Sec. 118. Individuals eligible for veterans benefits for a service-
                            connected disability.
Sec. 119. Individuals eligible for Indian Health Service assistance.
Sec. 120. Individuals eligible for TRICARE coverage.
Sec. 121. FSA and HRA interaction with HSAs.
Sec. 122. Special rule for certain medical expenses incurred before 
                            establishment of account.
Sec. 123. Preventive care prescription drug clarification.
Sec. 124. Administrative error correction before due date of return.
Sec. 125. Members of health care sharing ministries eligible to 
                            establish health savings accounts.
Sec. 126. High deductible health plans renamed HSA qualified plans.
Sec. 127. Treatment of direct primary care service arrangements.
Sec. 128. Certain provider fees to be treated as medical care.
Sec. 129. Clarification of treatment of capitated primary care payments 
                            as amounts paid for medical care.
                      Subtitle C--Other Provisions

Sec. 131. Limitation on employer-provided health care coverage.
Sec. 132. Limitation on abortion funding.
Sec. 133. No government discrimination against certain health care 
                            entities.
Sec. 134. Equal employer contribution rule to promote choice.
Sec. 135. Limitations on State restrictions on employer auto-
                            enrollment.
Sec. 136. Credit for small employers adopting auto-enrollment and 
                            defined contribution options.
             TITLE II--HEALTH CARE ACCESS AND AVAILABILITY

    Subtitle A--Health Insurance Pooling Mechanisms for Individuals

Sec. 201. Federal grants for State insurance expenditures.
Sec. 202. Pool reform for individual membership expansion.
               Subtitle B--Small Business Health Fairness

Sec. 211. Short title.
Sec. 212. Rules governing association health plans.
Sec. 213. Clarification of treatment of single employer arrangements.
Sec. 214. Enforcement provisions relating to association health plans.
Sec. 215. Cooperation between Federal and State authorities.
Sec. 216. Effective date and transitional and other rules.
                  Subtitle C--Health Insurance Reforms

Sec. 221. Requirements for individual health insurance.
           TITLE III--INTERSTATE MARKET FOR HEALTH INSURANCE

Sec. 301. Cooperative governing of individual health insurance 
                            coverage.
                    TITLE IV--LAWSUIT ABUSE REFORMS

Sec. 401. Change in burden of proof based on compliance with clinical 
                            practice guidelines.
Sec. 402. State grants to create expert panels and administrative 
                            health care tribunals.
Sec. 403. Payment of damages and recovery of costs in health care 
                            lawsuits.
Sec. 404. Definitions.
Sec. 405. Effect on other laws.
Sec. 406. Applicability; effective date.
                    TITLE V--WELLNESS AND PREVENTION

Sec. 501. Providing financial incentives for treatment compliance.
          TITLE VI--TRANSPARENCY AND INSURANCE REFORM MEASURES

Sec. 601. Receipt and response to requests for claim information.
                           TITLE VII--QUALITY

Sec. 701. Prohibition on certain uses of data obtained from comparative 
                            effectiveness research or from patient-
                            centered outcomes research; accounting for 
                            personalized medicine and differences in 
                            patient treatment response.
Sec. 702. Establishment of performance-based quality measures.
               TITLE VIII--STATE TRANSPARENCY PLAN PORTAL

Sec. 801. Providing information on health coverage options and health 
                            care providers.
                  TITLE IX--PATIENT FREEDOM OF CHOICE

Sec. 901. Guaranteeing freedom of choice and contracting for patients 
                            under Medicare.
Sec. 902. Preemption of State laws limiting charges for eligible 
                            professional services.
Sec. 903. Health care provider licensure cannot be conditioned on 
                            participation in a health plan.
Sec. 904. Bad debt deduction for doctors to partially offset the cost 
                            of providing uncompensated care required to 
                            be provided under amendments made by the 
                            Emergency Medical Treatment and Labor Act.
Sec. 905. Right of contract with health care providers.
                 TITLE X--QUALITY HEALTH CARE COALITION

Sec. 1001. Quality Health Care Coalition.

SEC. 2. REPEAL OF PPACA AND HEALTH CARE-RELATED HCERA PROVISIONS.

    (a) PPACA.--Effective as of the enactment of the Patient Protection 
and Affordable Care Act (Public Law 111-148), such Act is repealed, and 
the provisions of law amended or repealed by such Act are restored or 
revived as if such Act had not been enacted.
    (b) Health Care-Related Provisions in the Health Care and Education 
Reconciliation Act of 2010.--Effective as of the enactment of the 
Health Care and Education Reconciliation Act of 2010 (Public Law 111-
152), title I and subtitle B of title II of such Act are repealed, and 
the provisions of law amended or repealed by such title or subtitle, 
respectively, are restored or revived as if such title and subtitle had 
not been enacted.

SEC. 3. NO MANDATE OF GUARANTEED ISSUE OR COMMUNITY RATING.

    Nothing in this Act shall be construed to provide a mandate for 
guaranteed issue or community rating in the private insurance market.

   TITLE I--TAX INCENTIVES FOR MAINTAINING HEALTH INSURANCE COVERAGE

          Subtitle A--Tax Credit for Health Insurance Coverage

SEC. 101. REFUNDABLE TAX CREDIT FOR HEALTH INSURANCE COVERAGE.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986, as amended by section 2, is 
amended by inserting after section 36A the following new section:

``SEC. 36B. HEALTH INSURANCE COVERAGE.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by subtitle A an amount 
equal to the aggregate monthly credit amounts determined under 
subsection (b) with respect to the taxpayer and the taxpayer's 
qualifying family members for eligible coverage months beginning during 
the taxable year.
    ``(b) Monthly Credit Amounts.--
            ``(1) In general.--The monthly credit amount with respect 
        to any individual for any eligible coverage month is \1/12\ 
        of--
                    ``(A) $900 in the case of an individual who has not 
                attained age 18 as of the beginning of such month,
                    ``(B) $1,200 in the case of an individual who has 
                so attained age 18 but who has not so attained age 35,
                    ``(C) $2,100 in the case of an individual who has 
                so attained age 35, but who has not so attained age 50, 
                and
                    ``(D) $3,000 in the case of an individual who has 
                so attained age 50.
            ``(2) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2016, each of the 
        dollar amounts in paragraph (1) shall be increased by an amount 
        equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2015' for `calendar year 1992' in 
                subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $50.
    ``(c) Eligible Coverage Month.--For purposes of this section, the 
term `eligible coverage month' means, with respect to any individual, 
any month if, as of the first day of such month, the individual--
            ``(1) is covered by qualified health insurance,
            ``(2) does not have other specified coverage, and
            ``(3) is not imprisoned under Federal, State, or local 
        authority.
    ``(d) Qualifying Family Member.--For purposes of this section, the 
term `qualifying family member' means--
            ``(1) in the case of a joint return, the taxpayer's spouse, 
        and
            ``(2) any dependent of the taxpayer.
    ``(e) Qualified Health Insurance.--For purposes of this section, 
the term `qualified health insurance' means health insurance coverage 
(other than excepted benefits as defined in section 9832(c)) which 
constitutes medical care.
    ``(f) Other Specified Coverage.--For purposes of this section, an 
individual has other specified coverage for any month if, as of the 
first day of such month--
            ``(1) Coverage under medicare, medicaid, or schip.--Such 
        individual--
                    ``(A) is entitled to benefits under part A of title 
                XVIII of the Social Security Act or is enrolled under 
                part B of such title, or
                    ``(B) is enrolled in the program under title XIX or 
                XXI of such Act (other than under section 1928 of such 
                Act).
            ``(2) Certain other coverage.--Such individual--
                    ``(A) is enrolled in a health benefits plan under 
                chapter 89 of title 5, United States Code,
                    ``(B) is entitled to receive benefits under chapter 
                55 of title 10, United States Code,
                    ``(C) is entitled to receive benefits under chapter 
                17 of title 38, United States Code,
                    ``(D) is enrolled in a group health plan (within 
                the meaning of section 5000(b)(1)) which is subsidized 
                by the employer, or
                    ``(E) is a member of a health care sharing 
                ministry.
            ``(3) Health care sharing ministry.--For purposes of this 
        subsection, the term `health care sharing ministry' means an 
        organization--
                    ``(A) which is described in section 501(c)(3) and 
                is exempt from taxation under section 501(a),
                    ``(B) members of which share a common set of 
                ethical or religious beliefs and share medical expenses 
                among members in accordance with those beliefs and 
                without regard to the State in which a member resides 
                or is employed,
                    ``(C) members of which retain membership even after 
                they develop a medical condition,
                    ``(D) which (or a predecessor of which) has been in 
                existence at all times since December 31, 1999, and 
                medical expenses of the members of which have been 
                shared continuously and without interruption since at 
                least December 31, 1999, and
                    ``(E) which conducts an annual audit which is 
                performed by an independent certified public accounting 
                firm in accordance with generally accepted accounting 
                principles and which is made available to the public 
                upon request.
    ``(g) Special Rules.--
            ``(1) Credit in excess of premiums only payable to a health 
        savings account.--
                    ``(A) In general.--If the credit determined under 
                subsection (a) (determined without regard to clause 
                (ii)) for any taxable year exceeds the amount of 
                premiums paid by the taxpayer for coverage of the 
                taxpayer and the taxpayer's qualifying family members 
                under qualified health insurance for eligible coverage 
                months beginning in the taxable year--
                            ``(i) at the request of the taxpayer, the 
                        Secretary shall pay the amount of such excess 
                        to one or more health savings accounts of the 
                        taxpayer or of any qualifying family member of 
                        the taxpayer, and
                            ``(ii) the amount of such excess shall not 
                        be treated as a credit against the tax imposed 
                        by subtitle A for such taxable year.
                    ``(B) Medical and health savings accounts.--Amounts 
                distributed from an Archer MSA (as defined in section 
                220(d)) or from a health savings account (as defined in 
                section 223(d)) shall not be taken into account under 
                subparagraph (A) as premiums paid for coverage.
                    ``(C) Insurance which covers other individuals.--
                For purposes of this paragraph, rules similar to the 
                rules of section 213(d)(6) shall apply with respect to 
                any contract for qualified health insurance under which 
                amounts are payable for coverage of an individual other 
                than the taxpayer and qualifying family members.
                    ``(D) Contributions treated as rollovers, etc.--
                            ``(i) In general.--Any amount paid by the 
                        Secretary to a health savings account under 
                        this paragraph shall be treated for purposes of 
                        this title in the same manner as a rollover 
                        contribution to such an account described in 
                        section 223(f)(5), except that the limitation 
                        under section 223(f)(5)(B) shall not apply to 
                        such a contribution and such contribution shall 
                        not be taken into account in applying such 
                        limitation to any other amounts contributed.
                            ``(ii) Coordination with hsas.--Nothing in 
                        any provision of law shall be construed--
                                    ``(I) to prevent an individual from 
                                establishing a health savings account 
                                (as defined in section 223(d)) merely 
                                because such individual is not an 
                                eligible individual (as defined in 
                                section 223(c)), or
                                    ``(II) to prevent such an account 
                                from being treated as a health savings 
                                account merely because all or a 
                                substantial portion of the 
                                contributions to such account are 
                                described in this paragraph.
            ``(2) Coordination with advance payments of credit.--With 
        respect to any taxable year--
                    ``(A) the amount which would (but for this 
                subsection) be allowed as a credit to the taxpayer 
                under subsection (a) shall be reduced (but not below 
                zero) by the aggregate amount paid on behalf of such 
                taxpayer under section 7529 for months beginning in 
                such taxable year, and
                    ``(B) the tax imposed by section 1 for such taxable 
                year shall be increased by the excess (if any) of--
                            ``(i) the aggregate amount paid on behalf 
                        of such taxpayer under section 7529 for months 
                        beginning in such taxable year, over
                            ``(ii) the amount which would (but for this 
                        subsection) be allowed as a credit to the 
                        taxpayer under subsection (a).
            ``(3) Coordination with other provisions.--For purposes of 
        any deduction allowed under section 162(l), 213, or 224, and 
        any credit allowed under section 35, any health insurance 
        premiums which would (but for this paragraph) be taken into 
        account shall be reduced (but not below zero) by the amount of 
        the credit allowed under this section (determined without 
        regard to paragraphs (1) and (2)).
            ``(4) Denial of credit to dependents and nonpermanent 
        resident alien individuals.--No credit shall be allowed under 
        this section to any individual who is--
                    ``(A) not a citizen or lawful permanent resident of 
                the United States for the calendar year in which the 
                taxable year begins, or
                    ``(B) a dependent with respect to another taxpayer 
                for a taxable year beginning in the calendar year in 
                which such individual's taxable year begins.
            ``(5) Regulations.--The Secretary may prescribe such 
        regulations and other guidance as may be necessary or 
        appropriate to carry out this section, section 6050W, and 
        section 7529.''.
    (b) Advance Payment of Credit.--
            (1) In general.--Chapter 77 of the Internal Revenue Code of 
        1986 is amended by adding at the end the following:

``SEC. 7529. ADVANCE PAYMENT OF CREDIT FOR HEALTH INSURANCE COVERAGE.

    ``(a) General Rule.--Not later than January 1, 2016, the Secretary 
shall establish a program for making payments to--
            ``(1) providers of qualified health insurance (as defined 
        in section 36B(e)), and
            ``(2) as provided in subsection (c), health savings 
        accounts,
on behalf of taxpayers eligible for the credit under section 36B.
    ``(b) Amount of Payments.--The aggregate payments made under this 
section with respect to any taxpayer, determined as of any time during 
any calendar year, shall not exceed the monthly credit amounts 
determined with respect to such taxpayer under section 36B for months 
during such calendar year which have ended as of such time.
    ``(c) Application of Rule That Credits in Excess of Premiums Only 
Payable to a Health Savings Account.--Under rules similar to the rules 
of section 36B(g)(1), any amount otherwise payable on behalf of the 
taxpayer under subsection (b) with respect to any eligible coverage 
month which is in excess of the amount of premiums paid by the taxpayer 
for coverage of the taxpayer and the taxpayer's qualifying family 
members under qualified health insurance for such month shall be 
payable only to one or more health savings accounts of the taxpayer or 
of any qualifying family member of the taxpayer.
    ``(d) Certification Process and Proof of Coverage.--The Secretary 
shall establish a process under which individuals are certified as 
eligible for payment under this section. Such process shall include an 
initial application by the taxpayer to determine eligibility and 
thereafter continued eligibility shall be determined, to the maximum 
extent feasible, by the Secretary on the basis of information provided 
under section 6050X.
    ``(e) Definitions.--For purposes of this section, terms used in 
this section which are also used in section 36B shall have the same 
meaning as when used in section 36B.''.
            (2) Information reporting.--
                    (A) In general.--Subpart B of part III of 
                subchapter A of chapter 61 of such Code is amended by 
                adding at the end the following new section:

``SEC. 6050X. RETURNS RELATING TO CREDIT FOR HEALTH INSURANCE COVERAGE.

    ``(a) Requirement of Reporting.--Every person who provides 
qualified health insurance for any month of any calendar year with 
respect to any individual shall, at such time as the Secretary may 
prescribe, make the return described in subsection (b) with respect to 
each such individual. With respect to any individual with respect to 
whom payments under section 7529 are made by the Secretary, the 
Secretary may require that reporting under subsection (b) be made on a 
monthly basis.
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains, with respect to each policy of qualified 
        health insurance--
                    ``(A) the name, address, and TIN of each individual 
                covered under such policy,
                    ``(B) the premiums paid with respect to such 
                policy, and
                    ``(C) such other information as the Secretary may 
                prescribe.
    ``(c) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required to be set forth in such return a written statement showing--
            ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person, and
            ``(2) the information required to be shown on the return 
        with respect to such individual.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year to which such statement relates.
    ``(d) Definitions.--For purposes of this section, terms used in 
this section which are also used in section 36B shall have the same 
meaning as when used in section 36B.''.
                    (B) Assessable penalties.--
                            (i) Subparagraph (B) of section 6724(d)(1) 
                        of such Code, as amended by section 2, is 
                        amended by striking ``or'' at the end of clause 
                        (xxii), by striking ``and'' at the end of 
                        clause (xxiii) and inserting ``or'', and by 
                        inserting after clause (xxiii) the following 
                        new clause:
                            ``(xxiv) section 6050X (relating to returns 
                        relating to credit for health insurance 
                        coverage), and''.
                            (ii) Paragraph (2) of section 6724(d) of 
                        such Code, as amended by section 2, is amended 
                        by striking ``or'' at the end of subparagraph 
                        (EE), by striking the period at the end of 
                        subparagraph (FF) and inserting ``, or'', and 
                        by adding after subparagraph (FF) the following 
                        new subparagraph:
                    ``(GG) section 6050X (relating to returns relating 
                to credit for health insurance coverage).''.
            (3) Disclosure of return information for purposes of 
        advance payment of credit as premiums for qualified health 
        insurance.--
                    (A) In general.--Subsection (l) of section 6103 of 
                such Code, as amended by section 2, is amended by 
                adding at the end the following new paragraph:
            ``(21) Disclosure of return information related to payments 
        of the health insurance coverage credit.--The Secretary may, on 
        behalf of taxpayers eligible for the credit under section 36B, 
        disclose to a provider of qualified health insurance (as 
        defined in section 36(e)) or a trustee of a health savings 
        account (and persons acting on behalf of such provider or such 
        trustee), return information with respect to any such taxpayer 
        only to the extent necessary (as prescribed by regulations 
        issued by the Secretary) to carry out sections 36B(g)(1) 
        (relating to credit in excess of premiums only payable to a 
        health savings account) and 7529 (relating to advance payment 
        of credit for health insurance coverage).''.
                    (B) Confidentiality of information.--Paragraph (3) 
                of section 6103(a) of such Code, as amended by section 
                2, is amended by striking ``or (20)'' and inserting 
                ``(20), or (21)''.
                    (C) Unauthorized disclosure.--Paragraph (2) of 
                section 7213(a) of such Code, as amended by section 2, 
                is amended by striking ``or (20)'' and inserting 
                ``(20), or (21)''.
            (4) Effective date.--The amendments made by this section 
        shall take effect on the date of the enactment of this Act.
    (c) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, as amended by section 2, is amended by inserting 
        ``36B,'' after ``36A,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986, 
        as amended by section 2, is amended by inserting after the item 
        relating to section 36A the following new item:

``Sec. 36B. Health insurance coverage.''.
            (3) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 of such Code is amended by adding at 
        the end the following new item:

``Sec. 6050X. Returns relating to credit for health insurance 
                            coverage.''.
            (4) The table of sections for chapter 77 of such Code is 
        amended by adding at the end the following new item:

``Sec. 7529. Advance payment of credit for health insurance 
                            coverage.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 102. ELECTION OF TAX CREDIT INSTEAD OF ALTERNATIVE GOVERNMENT OR 
              GROUP PLAN BENEFITS.

    (a) In General.--Notwithstanding any other provision of law, an 
individual who is otherwise eligible for benefits under a health 
program (as defined in subsection (c)) may elect, in a form and manner 
specified by the Secretary of Health and Human Services in consultation 
with the Secretary of the Treasury, to receive a tax credit described 
in section 36B of the Internal Revenue Code of 1986 (which shall be 
used for the purpose of health insurance coverage) in lieu of receiving 
any benefits under such program.
    (b) Effective Date.--An election under subsection (a) may first be 
made for calendar year 2016 and any such election shall be effective 
for such period (not less than one calendar year) as the Secretary of 
Health and Human Services shall specify, in consultation with the 
Secretary of the Treasury.
    (c) Health Program Defined.--For purposes of this section, the term 
``health program'' means any of the following:
            (1) Medicare.--The Medicare program under part A of title 
        XVIII of the Social Security Act.
            (2) Medicaid.--The Medicaid program under title XIX of such 
        Act (including such a program operating under a Statewide 
        waiver under section 1115 of such Act).
            (3) SCHIP.--The State children's health insurance program 
        under title XXI of such Act.
            (4) TRICARE.--The TRICARE program under chapter 55 of title 
        10, United States Code.
            (5) Veterans benefits.--Coverage for benefits under chapter 
        17 of title 38, United States Code.
            (6) FEHBP.--Coverage under chapter 89 of title 5, United 
        States Code.
            (7) Subsidized group health plans.--Coverage under a group 
        health plan (within the meaning of section 5000(b)(1)) which is 
        subsidized by the employer.
    (d) Other Social Security Benefits Not Waived.--An election to 
waive the benefits described in subsection (c)(1) shall not result in 
the waiver of any other benefits under the Social Security Act.

                  Subtitle B--Health Savings Accounts

SEC. 111. REFUNDABLE TAX CREDIT FOR HEALTH SAVINGS ACCOUNT 
              CONTRIBUTIONS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986, as amended by the preceding 
provisions of this Act, is amended by inserting after section 36B the 
following new section:

``SEC. 36C. HEALTH SAVINGS ACCOUNT CONTRIBUTIONS.

    ``(a) In General.--In the case of an individual who is allowed a 
deduction under section 223(a) for any taxable year, there shall be 
allowed as a credit against the tax imposed by subtitle A for such 
taxable year, the lesser of--
            ``(1) the amount so allowed as a deduction, or
            ``(2) $1,000.
    ``(b) Limitation.--The credit allowed under subsection (a) with 
respect to any individual for any taxable year shall not exceed the 
excess (if any) of--
            ``(1) $1,000, over
            ``(2) the aggregate credits allowed with respect to such 
        individual under subsection (a) for all prior taxable years.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, as amended by the preceding provisions of this 
        Act, is amended by inserting ``36C,'' after ``36B,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986, 
        as amended by the preceding provisions of this Act, is amended 
        by inserting after the item relating to section 36B the 
        following new item:

``Sec. 36C. Health savings account contributions.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 112. ALLOWING HSA ROLLOVER TO CHILD OR PARENT OF ACCOUNT HOLDER.

    (a) In General.--Section 223(f)(8)(A) of the Internal Revenue Code 
of 1986 is amended--
            (1) by inserting ``child, parent, or grandparent'' after 
        ``surviving spouse'',
            (2) by inserting ``child, parent, or grandparent, as the 
        case may be,'' after ``the spouse'',
            (3) by inserting ``, child, parent, or grandparent'' after 
        ``spouse'' in the heading thereof, and
            (4) by adding at the end the following: ``In the case of a 
        child who acquires such beneficiary's interest and with respect 
        to whom a deduction under section 151 is allowable to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins, such health 
        savings account shall be treated as a child health savings 
        account of the child.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 113. MAXIMUM CONTRIBUTION LIMIT TO HSA COORDINATED WITH RETIREMENT 
              SAVINGS ACCOUNT LIMITATION.

    (a) Self-Only Coverage.--Section 223(b)(2)(A) of the Internal 
Revenue Code of 1986 is amended by striking ``$2,250'' and inserting 
``the amount in effect under section 219(b)(5)(A)''.
    (b) Family Coverage.--Section 223(b)(2)(B) of the Internal Revenue 
Code of 1986 is amended by striking ``$4,500'' and inserting ``twice 
the amount in effect under subparagraph (A)''.
    (c) Conforming Amendments.--Section 223(g)(1) of the Internal 
Revenue Code of 1986 is amended--
            (1) in the matter preceding subparagraph (A), by striking 
        ``subsections (b)(2) and (c)(2)(A)'' and inserting ``subsection 
        (c)(2)(A)'',
            (2) in subparagraph (B), by striking ``by substituting'' 
        and all that follows through the end of clause (ii) and 
        inserting ``by substituting `calendar year 2003' for `calendar 
        year 1992' in subparagraph (B) thereof.'', and
            (3) in the matter following subparagraph (B), by striking 
        ``subsections (b)(2) and (c)(2)(A)'' and inserting ``subsection 
        (c)(2)(A)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 114. TRANSFER OF REQUIRED MINIMUM DISTRIBUTION FROM RETIREMENT 
              PLAN TO HEALTH SAVINGS ACCOUNT.

    (a) Transfer From Retirement Plan.--
            (1) Individual retirement accounts.--Section 408(d) of the 
        Internal Revenue Code of 1986 is amended by adding at the end 
        the following new paragraph:
            ``(10) Required minimum distribution transferred to health 
        savings account.--
                    ``(A) In general.--In the case of an individual who 
                has attained the age of 70\1/2\ and who elects the 
                application of this paragraph for a taxable year, gross 
                income of the individual for the taxable year does not 
                include a qualified HSA transfer to the extent such 
                transfer is otherwise includible in gross income.
                    ``(B) Qualified hsa transfer.--For purposes of this 
                paragraph, the term `qualified HSA transfer' means any 
                distribution from an individual retirement plan--
                            ``(i) to a health savings account of the 
                        individual in a direct trustee-to-trustee 
                        transfer, and
                            ``(ii) to the extent such distribution does 
                        not exceed the required minimum distribution 
                        determined under section 401(a)(9) for the 
                        distribution calendar year ending during the 
                        taxable year.
                    ``(C) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which an 
                amount is treated as otherwise includible in gross for 
                purposes of subparagraph (A), the aggregate amount 
                distributed from an individual retirement plan shall be 
                treated as includible in gross income to the extent 
                that such amount does not exceed the aggregate amount 
                which would have been so includible if all amounts from 
                all individual retirement plans were distributed. 
                Proper adjustments shall be made in applying section 72 
                to other distributions in such taxable year and 
                subsequent taxable years.
                    ``(D) Coordination.--An election may not be made 
                under subparagraph (A) for a taxable year for which an 
                election is in effect under paragraph (9).''.
            (2) Other retirement plans.--Section 402 of such Code is 
        amended by adding at the end the following new subsection:
    ``(m) Required Minimum Distribution Transferred to Health Savings 
Account.--
            ``(1) In general.--In the case of an individual who has 
        attained the age of 70\1/2\ and who elects the application of 
        this subsection for a taxable year, gross income of the 
        individual for the taxable year does not include a qualified 
        HSA transfer to the extent such transfer is otherwise 
        includible in gross income.
            ``(2) Qualified hsa transfer.--For purposes of this 
        subsection, the term `qualified HSA transfer' means any 
        distribution from a retirement plan--
                    ``(A) to a health savings account of the individual 
                in a direct trustee-to-trustee transfer, and
                    ``(B) to the extent such distribution does not 
                exceed the required minimum distribution determined 
                under section 401(a)(9) for the distribution calendar 
                year ending during the taxable year.
            ``(3) Application of section 72.--Notwithstanding section 
        72, in determining the extent to which an amount is treated as 
        otherwise includible in gross for purposes of paragraph (1), 
        the aggregate amount distributed from an individual retirement 
        plan shall be treated as includible in gross income to the 
        extent that such amount does not exceed the aggregate amount 
        which would have been so includible if all amounts from all 
        individual retirement plans were distributed. Proper 
        adjustments shall be made in applying section 72 to other 
        distributions in such taxable year and subsequent taxable 
        years.
            ``(4) Eligible retirement plan.--For purposes of this 
        subsection, the term `eligible retirement plan' has the meaning 
        given such term by subsection (c)(8)(B) (determined without 
        regard to clauses (i) and (ii) thereof).''.
    (b) Transfer to Health Savings Account.--
            (1) In general.--Section 223(d)(1)(A) of the Internal 
        Revenue Code of 1986 is amended by striking ``or'' at the end 
        of clause (i), by striking the period at the end of clause 
        (ii)(II) and inserting ``, or'', and by adding at the end the 
        following new clause:
                            ``(iii) unless it is a qualified HSA 
                        transfer described in section 408(d)(10) or 
                        402(m).''.
            (2) Excise tax inapplicable to qualified hsa transfer.--
        Section 4973(g)(1) of such Code is amended by inserting ``or a 
        qualified HSA transfer described in section 408(d)(10) or 
        402(m)'' after ``or 223(f)(5)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after the date of the enactment of this 
Act.

SEC. 115. EQUIVALENT BANKRUPTCY PROTECTIONS FOR HEALTH SAVINGS ACCOUNTS 
              AS RETIREMENT FUNDS.

    (a) In General.--Section 522 of title 11, United States Code, is 
amended by adding at the end the following:
    ``(r) Treatment of Health Savings Accounts.--For purposes of this 
section, any health savings account (as described in section 223 of the 
Internal Revenue Code of 1986) shall be treated in the same manner as 
an individual retirement account described in section 408 of such 
Code.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to cases commencing under title 11, United States Code, after the date 
of enactment of this Act.

SEC. 116. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME 
              HSA ACCOUNT.

    (a) In General.--Section 223(b)(3) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(C) Special rule where both spouses are eligible 
                individuals with 1 account.--If--
                            ``(i) an individual and the individual's 
                        spouse have both attained age 55 before the 
                        close of the taxable year, and
                            ``(ii) the spouse is not an account 
                        beneficiary of a health savings account as of 
                        the close of such year,
                the additional contribution amount shall be twice the 
                amount otherwise determined under subparagraph (B).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 117. PROVISIONS RELATING TO MEDICARE.

    (a) Individuals Over Age 65 Only Enrolled in Medicare Part A.--
Section 223(b)(7) of the Internal Revenue Code of 1986 is amended by 
adding at the end the following: ``This paragraph shall not apply to 
any individual during any period for which the individual's only 
entitlement to such benefits is an entitlement to hospital insurance 
benefits under part A of title XVIII of such Act pursuant to an 
enrollment for such hospital insurance benefits under section 226(a)(1) 
of such Act.''.
    (b) Medicare Beneficiaries Participating in Medicare Advantage MSA 
May Contribute Their Own Money to Their MSA.--
            (1) In general.--Section 138(b) of such Code is amended by 
        striking paragraph (2) and by redesignating paragraphs (3) and 
        (4) as paragraphs (2) and (3), respectively.
            (2) Conforming amendment.--Section 138(c)(4) of such Code 
        is amended by striking ``and paragraph (2)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 118. INDIVIDUALS ELIGIBLE FOR VETERANS BENEFITS FOR A SERVICE-
              CONNECTED DISABILITY.

    (a) In General.--Subparagraph (C) of section 223(c)(1) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                    ``(C) Special rule for individuals eligible for 
                certain veterans benefits.--For purposes of 
                subparagraph (A)(ii), an individual shall not be 
                treated as covered under a health plan described in 
                such subparagraph merely because the individual 
                receives periodic hospital care or medical services for 
                a service-connected disability under any law 
                administered by the Secretary of Veterans Affairs but 
                only if the individual is not eligible to receive such 
                care or services for any condition other than a 
                service-connected disability.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 119. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH SERVICE ASSISTANCE.

    (a) In General.--Section 223(c)(1) of the Internal Revenue Code of 
1986, as amended by the preceding provisions of this Act, is amended by 
adding at the end the following new subparagraph:
                    ``(D) Special rule for individuals eligible for 
                assistance under indian health service programs.--For 
                purposes of subparagraph (A)(ii), an individual shall 
                not be treated as covered under a health plan described 
                in such subparagraph merely because the individual 
                receives hospital care or medical services under a 
                medical care program of the Indian Health Service or of 
                a tribal organization.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 120. INDIVIDUALS ELIGIBLE FOR TRICARE COVERAGE.

    (a) In General.--Section 223(c)(1) of the Internal Revenue Code of 
1986, as amended by the preceding provisions of this Act, is amended by 
adding at the end the following new subparagraph:
                    ``(E) Special rule for individuals eligible for 
                assistance under tricare.--For purposes of subparagraph 
                (A)(ii), an individual shall not be treated as covered 
                under a health plan described in such subparagraph 
                merely because the individual is eligible to receive 
                hospital care, medical services, or prescription drugs 
                under TRICARE Extra or TRICARE Standard and such 
                individual is not enrolled in TRICARE Prime.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 121. FSA AND HRA INTERACTION WITH HSAS.

    (a) Eligible Individuals Include FSA and HRA Participants.--Section 
223(c)(1)(B) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``and'' at the end of clause (ii),
            (2) by striking the period at the end of clause (iii) and 
        inserting ``, and'', and
            (3) by inserting after clause (iii) the following new 
        clause:
                            ``(iv) for months during a plan year in 
                        which a qualified HSA distribution (as defined 
                        in section 106(e)(2)) is made on behalf of an 
                        individual, coverage under a health flexible 
                        spending arrangement or a health reimbursement 
                        arrangement if, after the qualified HSA 
                        distribution is made and for the remaining 
                        duration of the plan year, the coverage 
                        provided under the health flexible spending 
                        arrangement or health reimbursement arrangement 
                        is converted to coverage which--
                                    ``(I) does not pay or reimburse any 
                                medical expense incurred before the 
                                minimum annual deductible under 
                                paragraph (2)(A)(i) (prorated for the 
                                period occurring after the qualified 
                                HSA distribution is made) is satisfied,
                                    ``(II) does not pay or reimburse 
                                any medical expense incurred after the 
                                qualified HSA distribution is made 
                                other than preventive care as defined 
                                in paragraph (2)(C),
                                    ``(III) pays or reimburses benefits 
                                for coverage described in clause (ii) 
                                (but not through insurance or for long-
                                term care services),
                                    ``(IV) pays or reimburses benefits 
                                for permitted insurance or coverage 
                                described in clause (ii) (but not for 
                                long-term care services),
                                    ``(V) pays or reimburses only those 
                                medical expenses incurred after an 
                                individual's retirement (and no 
                                expenses incurred before retirement), 
                                or
                                    ``(VI) is suspended, pursuant to an 
                                election made on or before the date the 
                                individual elects the qualified HSA 
                                distribution or, if later, on the date 
                                of the individual enrolls in a high 
                                deductible health plan, and which does 
                                not pay or reimburse, at any time, any 
                                medical expense incurred during the 
                                suspension period except as defined in 
                                the preceding subclauses of this 
                                clause.''.
    (b) Qualified HSA Distribution Shall Not Affect Flexible Spending 
Arrangement.--Section 106(e)(1) of the Internal Revenue Code of 1986 is 
amended to read as follows:
            ``(1) In general.--A plan shall not fail to be treated as a 
        health flexible spending arrangement under this section, 
        section 105, or section 125, or as a health reimbursement 
        arrangement under this section or section 105, merely because 
        such plan provides for a qualified HSA distribution.''.
    (c) FSA Balances at Year End Shall Not Forfeit.--Section 125(d)(2) 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph:
                    ``(E) Exception for qualified hsa distributions.--
                Subparagraph (A) shall not apply to the extent that 
                there is an amount remaining in a health flexible 
                spending account at the end of a plan year that an 
                individual elects to contribute to a health savings 
                account pursuant to a qualified HSA distribution (as 
                defined in section 106(e)(2)).''.
    (d) Simplification of Limitations on FSA and HRA Rollovers.--
Section 106(e)(2) of such Code is amended to read as follows:
            ``(2) Qualified hsa distribution.--
                    ``(A) In general.--The term `qualified HSA 
                distribution' means a distribution from a health 
                flexible spending arrangement or health reimbursement 
                arrangement to the extent that such distribution does 
                not exceed the lesser of--
                            ``(i) the balance in such arrangement as of 
                        the date of such distribution, or
                            ``(ii) the amount determined under 
                        subparagraph (B).
                Such term shall not include more than 1 distribution 
                with respect to any arrangement.
                    ``(B) Dollar limitations.--
                            ``(i) Distributions from a health flexible 
                        spending arrangement.--A qualified HSA 
                        distribution from a health flexible spending 
                        arrangement shall not exceed the applicable 
                        amount.
                            ``(ii) Distributions from a health 
                        reimbursement arrangement.--A qualified HSA 
                        distribution from a health reimbursement 
                        arrangement shall not exceed--
                                    ``(I) the applicable amount divided 
                                by 12, multiplied by
                                    ``(II) the number of months during 
                                which the individual is a participant 
                                in the health reimbursement 
                                arrangement.
                            ``(iii) Applicable amount.--For purposes of 
                        this subparagraph, the applicable amount is--
                                    ``(I) the dollar amount in effect 
                                under section 223(b)(2)(A) in the case 
                                of an eligible individual who has self-
                                only coverage under a high deductible 
                                health plan at the time of such 
                                distribution, and
                                    ``(II) twice the dollar amount in 
                                effect under subclause (I) in the case 
                                of an eligible individual who has 
                                family coverage under a high deductible 
                                health plan at the time of such 
                                distribution.''.
    (e) Elimination of Additional Tax for Failure To Maintain High 
Deductible Health Plan Coverage.--Section 106(e) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking paragraph (3) and redesignating paragraphs 
        (4) and (5) as paragraphs (3) and (4), respectively, and
            (2) by striking subparagraph (A) of paragraph (3), as so 
        redesignated, and redesignating subparagraphs (B) and (C) of 
        such paragraph as subparagraphs (A) and (B) thereof, 
        respectively.
    (f) Limited Purpose FSAs and HRAs.--Section 106(e) of the Internal 
Revenue Code of 1986, as amended by this section, is amended by adding 
at the end the following new paragraph:
            ``(5) Limited purpose fsas and hras.--A plan shall not fail 
        to be a health flexible spending arrangement or health 
        reimbursement arrangement under this section or section 105 
        merely because the plan converts coverage for individuals who 
        enroll in a high deductible health plan described in section 
        223(c)(2) to coverage described in section 223(c)(1)(B)(iv). 
        Coverage for such individuals may be converted as of the date 
        of enrollment in the high deductible health plan, without 
        regard to the period of coverage under the health flexible 
        spending arrangement or health reimbursement arrangement, and 
        without requiring any change in coverage to individuals who do 
        not enroll in a high deductible health plan.''.
    (g) Disclaimer of Disqualifying Coverage.--Section 223(c)(1)(B) of 
the Internal Revenue Code of 1986, as amended by this section, is 
amended--
            (1) by striking ``and'' at the end of clause (iii),
            (2) by striking the period at the end of clause (iv) and 
        inserting ``, and'', and
            (3) by inserting after clause (iv) the following new 
        clause:
                            ``(v) coverage (including prospective 
                        coverage) under a health plan that is not a 
                        high deductible health plan which is disclaimed 
                        in writing, at the time of the creation or 
                        organization of the health savings account, 
                        including by execution of a trust described in 
                        subsection (d)(1) through a governing 
                        instrument that includes such a disclaimer, or 
                        by acceptance of an amendment to such a trust 
                        that includes such a disclaimer.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 122. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE 
              ESTABLISHMENT OF ACCOUNT.

    (a) In General.--Section 223(d)(2) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(D) Certain medical expenses incurred before 
                establishment of account treated as qualified.--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--
                            ``(i) during either--
                                    ``(I) the taxable year in which the 
                                health savings account was established, 
                                or
                                    ``(II) the preceding taxable year 
                                in the case of a health savings account 
                                established after the taxable year in 
                                which such expense was incurred but 
                                before the time prescribed by law for 
                                filing the return for such taxable year 
                                (not including extensions thereof), and
                            ``(ii) for medical care of an individual 
                        during a period that such individual was 
                        covered by a high deductible health plan and 
                        met the requirements of subsection 
                        (c)(1)(A)(ii) (after application of subsection 
                        (c)(1)(B)).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 123. PREVENTIVE CARE PRESCRIPTION DRUG CLARIFICATION.

    (a) Clarify Use of Drugs in Preventive Care.--Section 223(c)(2)(C) 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following: ``For purposes of the preceding sentence, the term 
`preventative care' includes prescription and over-the-counter drugs 
and medicines which have the primary purpose of preventing the onset 
of, further deterioration from, or complications associated with 
chronic conditions, illnesses, or diseases.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2003.

SEC. 124. ADMINISTRATIVE ERROR CORRECTION BEFORE DUE DATE OF RETURN.

    (a) In General.--Section 223(f)(4) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(D) Exception for administrative errors corrected 
                before due date of return.--Subparagraph (A) shall not 
                apply if any payment or distribution is made to correct 
                an administrative, clerical or payroll contribution 
                error and if--
                            ``(i) such distribution is received by the 
                        individual on or before the last day prescribed 
                        by law (including extensions of time) for 
                        filing such individual's return for such 
                        taxable year, and
                            ``(ii) such distribution is accompanied by 
                        the amount of net income attributable to such 
                        contribution.
                Any net income described in clause (ii) shall be 
                included in the gross income of the individual for the 
                taxable year in which it is received.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 125. MEMBERS OF HEALTH CARE SHARING MINISTRIES ELIGIBLE TO 
              ESTABLISH HEALTH SAVINGS ACCOUNTS.

    (a) In General.--Section 223 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(i) Application to Health Care Sharing Ministries.--For purposes 
of this section, membership in a health care sharing ministry (as 
defined in section 5000A(d)(2)(B)(ii)) shall be treated as coverage 
under a high deductible health plan.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 126. HIGH DEDUCTIBLE HEALTH PLANS RENAMED HSA QUALIFIED PLANS.

    (a) In General.--Section 223 of the Internal Revenue Code of 1986, 
as amended by this Act, is amended by striking ``high deductible health 
plan'' each place it appears and inserting ``HSA qualified health 
plan''.
    (b) Conforming Amendments.--
            (1) Section 106(e) of the Internal Revenue Code of 1986, as 
        amended by this Act, is amended by striking ``high deductible 
        health plan'' each place it appears and inserting ``HSA 
        qualified health plan''.
            (2) The heading for section 223(c)(2) of such Code is 
        amended by striking ``High deductible health plan'' and 
        inserting ``HSA qualified health plan''.
            (3) Section 408(d)(9) of such Code is amended--
                    (A) by striking ``high deductible health plan'' 
                each place it appears in subparagraph (C) and inserting 
                ``HSA qualified health plan'', and
                    (B) by striking ``High deductible health plan'' in 
                the heading of subparagraph (D) and inserting ``HSA 
                qualified health plan''.

SEC. 127. TREATMENT OF DIRECT PRIMARY CARE SERVICE ARRANGEMENTS.

    (a) In General.--Section 223(c) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(6) Treatment of direct primary care service 
        arrangements.--An arrangement under which an individual is 
        provided coverage restricted to primary care services in 
        exchange for a fixed periodic fee--
                    ``(A) shall not be treated as a health plan for 
                purposes of paragraph (1)(A)(ii), and
                    ``(B) shall not be treated as insurance for 
                purposes of subsection (d)(2)(B).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 128. CERTAIN PROVIDER FEES TO BE TREATED AS MEDICAL CARE.

    (a) In General.--Section 213(d) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(12) Periodic provider fees.--The term `medical care' 
        includes periodic fees paid to a primary care physician for the 
        right to receive medical services on an as-needed basis.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 129. CLARIFICATION OF TREATMENT OF CAPITATED PRIMARY CARE PAYMENTS 
              AS AMOUNTS PAID FOR MEDICAL CARE.

    (a) In General.--Section 213(d) of the Internal Revenue Code of 
1986, as amended by the preceding provisions of this Act, is amended by 
adding at the end the following new paragraph:
            ``(13) Treatment of capitated primary care payments.--
        Capitated primary care payments shall be treated as amounts 
        paid for medical care.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

                      Subtitle C--Other Provisions

SEC. 131. LIMITATION ON EMPLOYER-PROVIDED HEALTH CARE COVERAGE.

    (a) In General.--Section 106 of the Internal Revenue Code of 1986, 
as amended by the preceding provisions of this Act, is amended by 
adding at the end the following new subsection:
    ``(f) Limitation on Employer-Provided Health Care Coverage.--
            ``(1) In general.--The amount of any exclusion under 
        subsection (a) for any taxable year with respect to--
                    ``(A) any employer-provided coverage under an 
                accident or health plan which constitutes medical care, 
                and
                    ``(B) any employer contribution to an Archer MSA or 
                a health savings account which is treated by subsection 
                (b) or (d) as employer-provided coverage for medical 
                expenses under an accident or health plan,
        shall not exceed $8,000 per employee for self-only coverage and 
        $20,000 for family coverage.
            ``(2) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2016, each of the 
        dollar amounts in paragraph (1) shall be increased by an amount 
        equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2015' for `calendar year 1992' in 
                subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $50.
            ``(3) Medical care.--For purposes of paragraph (1), the 
        term `medical care' has the meaning given to such term in 
        section 213(d) determined without regard to--
                    ``(A) paragraph (1)(C) thereof, and
                    ``(B) so much of paragraph (1)(D) thereof as 
                relates to qualified long-term care insurance.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2015.

SEC. 132. LIMITATION ON ABORTION FUNDING.

    No funds authorized under, or credits or deductions allowed under 
the Internal Revenue Code of 1986 by reason of, this Act (or any 
amendment made by this Act) may be used to pay for any abortion or to 
cover any part of the costs of any health plan that includes coverage 
of abortion, except in the case where a woman suffers from a physical 
disorder, physical injury, or physical illness that would, as certified 
by a physician, place the woman in danger of death unless an abortion 
is performed, including a life-endangering physical condition caused by 
or arising from the pregnancy itself, or unless the pregnancy is the 
result of an act of rape or incest.

SEC. 133. NO GOVERNMENT DISCRIMINATION AGAINST CERTAIN HEALTH CARE 
              ENTITIES.

    (a) Non-Discrimination.--A Federal agency or program, and any State 
or local government that receives Federal financial assistance under 
this Act or any amendment made by this Act (either directly or 
indirectly), may not subject any individual or institutional 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.
    (c) Remedies.--
            (1) In general.--The courts of the United States shall have 
        jurisdiction to prevent and redress actual or threatened 
        violations of this section by issuing any form of legal or 
        equitable relief, including--
                    (A) injunctions prohibiting conduct that violates 
                this section; and
                    (B) orders preventing the disbursement of all or a 
                portion of Federal financial assistance to a State or 
                local government, or to a specific offending agency or 
                program of a State or local government, until such time 
                as the conduct prohibited by this section has ceased.
            (2) Commencement of action.--An action under this 
        subsection may be instituted by--
                    (A) any health care entity that has standing to 
                complain of an actual or threatened violation of this 
                section; or
                    (B) the Attorney General of the United States.
    (d) Administration.--The Secretary of Health and Human Services 
shall designate the Director of the Office for Civil Rights of the 
Department of Health and Human Services--
            (1) to receive complaints alleging a violation of this 
        section;
            (2) subject to paragraph (3), to pursue the investigation 
        of such complaints in coordination with the Attorney General; 
        and
            (3) in the case of a complaint related to a Federal agency 
        (other than with respect to the Department of Health and Human 
        Services) or program administered through such other agency or 
        any State or local government receiving Federal financial 
        assistance through such other agency, to refer the complaint to 
        the appropriate office of such other agency.

SEC. 134. EQUAL EMPLOYER CONTRIBUTION RULE TO PROMOTE CHOICE.

    (a) In General.--Section 5000 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(e) Health Care Contribution Election.--
            ``(1) In general.--Subsection (a) shall not apply in the 
        case of a group health plan with respect to which the 
        requirements of paragraphs (2) and (3) are met.
            ``(2) Contribution election.--The requirement of this 
        paragraph is met with respect to a group health plan if any 
        employee of an employer (who but for this paragraph would be 
        covered by such plan) may elect to have the employer or 
        employee organization pay an amount which is not less than the 
        contribution amount to any provider of health insurance 
        coverage which constitutes medical care of the individual or 
        individual's spouse or dependents (other than excepted benefits 
        as defined in section 9832(c)) in lieu of such group health 
        plan coverage otherwise provided or contributed to by the 
        employer with respect to such employee.
            ``(3) Pre-existing conditions.--
                    ``(A) In general.--The requirement of this 
                paragraph is met with respect to health insurance 
                coverage provided to a participant or beneficiary by 
                any health insurance issuer if, under such plan the 
                requirements of section 9801 are met with respect to 
                the participant or beneficiary.
                    ``(B) Enforcement with respect to individual 
                election.--For purposes of subparagraph (A), any health 
                insurance coverage with respect to the participant or 
                beneficiary shall be treated as health insurance 
                coverage under a group health plan to which section 
                9801 applies.
            ``(4) Contribution amount.--For purposes of this section, 
        the term `contribution amount' means, with respect to an 
        individual under a group health plan, the portion of the 
        applicable premium of such individual under such plan (as 
        determined under section 4980B(f)(4)) which is not paid by the 
        individual. In the case that the employer offers more than one 
        group health plan, the contribution amount shall be the average 
        amount of the applicable premiums under such plans.
            ``(5) Group health plan.--For purposes of this subsection, 
        subsection (d) shall not apply.
            ``(6) Application to fehbp.--Notwithstanding any other 
        provision of law, the Office of Personnel Management shall 
        carry out the health benefits program under chapter 89 of title 
        5, United States Code, consistent with the requirements of this 
        subsection.''.
    (b) Requirement of Equal Contributions to All FEHBP Plans.--Section 
8906 of title 5, United States Code, is amended by adding at the end 
the following:
    ``(j) Notwithstanding subsections (a) through (i), the Office of 
Personnel Management shall revise the amount of the Government 
contribution made under this section in a manner so that--
            ``(1) the amount of such contribution does not change based 
        on the health benefits plan in which the individual is 
        enrolled; and
            ``(2) the aggregate amount of such contributions is 
        estimated to be equal to the aggregate amount of such 
        contributions if this subsection did not apply.''.
    (c) Employee Retirement Income Security Act of 1974 Conforming 
Amendments.--
            (1) Exception from hipaa requirements for benefits provided 
        under health care contribution election.--Section 732 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1191a) is amended by adding at the end the following new 
        subsection:
    ``(e) Health Care Contribution Election.--
            ``(1) In general.--The requirements of this part shall not 
        apply in the case of health insurance coverage (other than 
        excepted benefits as defined in section 9832(c) of the Internal 
        Revenue Code of 1986)--
                    ``(A) which is provided to a participant or 
                beneficiary by a health insurance issuer under a group 
                health plan, and
                    ``(B) with respect to which the requirements of 
                paragraphs (2) and (3) are met.
            ``(2) Contribution election.--The requirement of this 
        paragraph is met with respect to health insurance coverage 
        provided to a participant or beneficiary by any health 
        insurance issuer under a group health plan if, under such 
        plan--
                    ``(A) the participant may elect such coverage for 
                any period of coverage in lieu of health insurance 
                coverage otherwise provided under such plan for such 
                period, and
                    ``(B) in the case of such an election, the plan 
                sponsor is required to pay to such issuer for the 
                elected coverage for such period an amount which is not 
                less than the contribution amount for such health 
                insurance coverage otherwise provided under such plan 
                for such period.
            ``(3) Pre-existing conditions.--
                    ``(A) In general.--The requirement of this 
                paragraph is met with respect to health insurance 
                coverage provided to a participant or beneficiary by 
                any health insurance issuer if, under such plan the 
                requirements of section 701 are met with respect to the 
                participant or beneficiary.
                    ``(B) Enforcement with respect to individual 
                election.--For purposes of subparagraph (A), any health 
                insurance coverage with respect to the participant or 
                beneficiary shall be treated as health insurance 
                coverage under a group health plan to which section 701 
                applies.
            ``(4) Contribution amount.--
                    ``(A) In general.--For purposes of this section, 
                the term `contribution amount' means, with respect to 
                any period of health insurance coverage offered to a 
                participant or beneficiary, the portion of the 
                applicable premium of such participant or beneficiary 
                under such plan which is not paid by such participant 
                or beneficiary. In the case that the employer offers 
                more than one group health plan, the contribution 
                amount shall be the average amount of the applicable 
                premiums under such plans.
                    ``(B) Applicable premium.--For purposes of 
                subparagraph (A), the term `applicable premium' means, 
                with respect to any period of health insurance coverage 
                of a participant or beneficiary under a group health 
                plan, the cost to the plan for such period of such 
                coverage for similarly situated beneficiaries (without 
                regard to whether such cost is paid by the plan sponsor 
                or the participant or beneficiary).''.
            (2) Exemption from fiduciary liability.--Section 404 of 
        such Act (29 U.S.C. 1104) is amended by adding at the end the 
        following new subsection:
    ``(e) The plan sponsor of a group health plan (as defined in 
section 733(a)) shall not be treated as breaching any of the 
responsibilities, obligations, or duties imposed upon fiduciaries by 
this title in the case of any individual who is a participant or 
beneficiary under such plan solely because of the extent to which the 
plan sponsor provides, in the case of such individual, some or all of 
such benefits by means of payment of contribution amounts pursuant to a 
contribution election under section 732(e), irrespective of the amount 
or type of benefits that would otherwise be provided to such individual 
under such plan.''.
    (d) Exception From HIPAA Requirements Under IRC for Benefits 
Provided Under Health Care Contribution Election.--Section 9831 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subsection:
    ``(d) Health Care Contribution Election.--
            ``(1) In general.--The requirements of this chapter shall 
        not apply in the case of health insurance coverage (other than 
        excepted benefits as defined in section 9832(c))--
                    ``(A) which is provided to a participant or 
                beneficiary by a health insurance issuer under a group 
                health plan, and
                    ``(B) with respect to which the requirements of 
                paragraphs (2) and (3) are met.
            ``(2) Contribution election.--The requirement of this 
        paragraph is met with respect to health insurance coverage 
        provided to a participant or beneficiary by any health 
        insurance issuer under a group health plan if, under such 
        plan--
                    ``(A) the participant may elect such coverage for 
                any period of coverage in lieu of health insurance 
                coverage otherwise provided under such plan for such 
                period, and
                    ``(B) in the case of such an election, the plan 
                sponsor is required to pay to such issuer for the 
                elected coverage for such period an amount which is not 
                less than the contribution amount for such health 
                insurance coverage otherwise provided under such plan 
                for such period.
            ``(3) Pre-existing conditions.--
                    ``(A) In general.--The requirement of this 
                paragraph is met with respect to health insurance 
                coverage provided to a participant or beneficiary by 
                any health insurance issuer if, under such plan the 
                requirements of section 9801 are met with respect to 
                the participant or beneficiary.
                    ``(B) Enforcement with respect to individual 
                election.--For purposes of subparagraph (A), any health 
                insurance coverage with respect to the participant or 
                beneficiary shall be treated as health insurance 
                coverage under a group health plan to which section 
                9801 applies.
            ``(4) Contribution amount.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `contribution amount' means, with respect to 
                any period of health insurance coverage offered to a 
                participant or beneficiary, the portion of the 
                applicable premium of such participant or beneficiary 
                under such plan which is not paid by such participant 
                or beneficiary. In the case that the employer offers 
                more than one group health plan, the contribution 
                amount shall be the average amount of the applicable 
                premiums under such plans.
                    ``(B) Applicable premium.--For purposes of 
                subparagraph (A), the term `applicable premium' means, 
                with respect to any period of health insurance coverage 
                of a participant or beneficiary under a group health 
                plan, the cost to the plan for such period of such 
                coverage for similarly situated beneficiaries (without 
                regard to whether such cost is paid by the plan sponsor 
                or the participant or beneficiary).''.
    (e) Exception From HIPAA Requirements Under the PHSA for Benefits 
Provided Under Health Care Contribution Election.--Section 2721 of the 
Public Health Service Act (42 U.S.C. 300gg-21) is amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d) the following new 
        subsection:
    ``(e) Health Care Contribution Election.--
            ``(1) In general.--The requirements of subparts 1 through 3 
        shall not apply in the case of health insurance coverage (other 
        than excepted benefits as defined in section 9832(c) of the 
        Internal Revenue Code of 1986)--
                    ``(A) which is provided to a participant or 
                beneficiary by a health insurance issuer under a group 
                health plan, and
                    ``(B) with respect to which the requirements of 
                paragraphs (2) and (3) are met.
            ``(2) Contribution election.--The requirement of this 
        paragraph is met with respect to health insurance coverage 
        provided to a participant or beneficiary by any health 
        insurance issuer under a group health plan if, under such 
        plan--
                    ``(A) the participant may elect such coverage for 
                any period of coverage in lieu of health insurance 
                coverage otherwise provided under such plan for such 
                period, and
                    ``(B) in the case of such an election, the plan 
                sponsor is required to pay to such issuer for the 
                elected coverage for such period an amount which is not 
                less than the contribution amount for such health 
                insurance coverage otherwise provided under such plan 
                for such period.
            ``(3) Pre-existing conditions.--
                    ``(A) In general.--The requirement of this 
                paragraph is met with respect to health insurance 
                coverage provided to a participant or beneficiary by 
                any health insurance issuer if, under such plan the 
                requirements of section 2701 are met with respect to 
                the participant or beneficiary.
                    ``(B) Enforcement with respect to individual 
                election.--For purposes of subparagraph (A), any health 
                insurance coverage with respect to the participant or 
                beneficiary shall be treated as health insurance 
                coverage under a group health plan to which section 
                2701 applies.
            ``(4) Contribution amount.--
                    ``(A) In general.--For purposes of this section, 
                the term `contribution amount' means, with respect to 
                any period of health insurance coverage offered to a 
                participant or beneficiary, the portion of the 
                applicable premium of such participant or beneficiary 
                under such plan which is not paid by such participant 
                or beneficiary. In the case that the employer offers 
                more than one group health plan, the contribution 
                amount shall be the average amount of the applicable 
                premiums under such plans.
                    ``(B) Applicable premium.--For purposes of 
                subparagraph (A), the term `applicable premium' means, 
                with respect to any period of health insurance coverage 
                of a participant or beneficiary under a group health 
                plan, the cost to the plan for such period of such 
                coverage for similarly situated beneficiaries (without 
                regard to whether such cost is paid by the plan sponsor 
                or the participant or beneficiary).''.

SEC. 135. LIMITATIONS ON STATE RESTRICTIONS ON EMPLOYER AUTO-
              ENROLLMENT.

    (a) In General.--No State shall establish a law that prevents an 
employer that is allowed an exclusion from gross income, a deduction, 
or a credit for Federal income tax purposes for health benefits 
furnished to a participant or beneficiary from instituting auto-
enrollment which meets the requirements of subsection (b) for coverage 
of a participant or beneficiary 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) Automatic Enrollment for Employer-Sponsored Health Benefits.--
            (1) In general.--The requirement of this subsection with 
        respect to an employer and an employee is that the employer 
        automatically enroll such employee into the employment-based 
        health benefits plan for individual coverage under the plan 
        option with the lowest applicable employee premium.
            (2) Opt-out.--In no case may an employer automatically 
        enroll an employee in a plan under paragraph (1) if such 
        employee makes an affirmative election to opt-out of such plan 
        or to elect coverage under an employment-based health benefits 
        plan offered by such employer. An employer shall provide an 
        employee with a 30-day period to make such an affirmative 
        election before the employer may automatically enroll the 
        employee in such a plan.
            (3) Notice requirements.--
                    (A) In general.--Each employer described in 
                paragraph (1) who automatically enrolls an employee 
                into a plan as described in such paragraph shall 
                provide the employees, within a reasonable period 
                before the beginning of each plan year (or, in the case 
                of new employees, within a reasonable period before the 
                end of the enrollment period for such a new employee), 
                written notice of the employees' rights and obligations 
                relating to the automatic enrollment requirement under 
                such paragraph. Such notice must be comprehensive and 
                understood by the average employee to whom the 
                automatic enrollment requirement applies.
                    (B) Inclusion of specific information.--The written 
                notice under subparagraph (A) must explain an 
                employee's right to opt out of being automatically 
                enrolled in a plan and in the case that more than one 
                level of benefits or employee premium level is offered 
                by the employer involved, the notice must explain which 
                level of benefits and employee premium level the 
                employee will be automatically enrolled in the absence 
                of an affirmative election by the employee.
    (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).
    (d) Non-Application to Excepted Benefits.--For purposes of this 
section, the term ``group health plan'' does not include excepted 
benefits (as defined in section 2781(c) of the Public Health Service 
Act (42 U.S.C. 300gg-91(c))).

SEC. 136. CREDIT FOR SMALL EMPLOYERS ADOPTING AUTO-ENROLLMENT AND 
              DEFINED CONTRIBUTION OPTIONS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986, as amended by section 2, is 
amended by adding at the end the following new section:

``SEC. 45R. AUTO-ENROLLMENT AND DEFINED CONTRIBUTION OPTION FOR HEALTH 
              BENEFITS PLANS OF SMALL EMPLOYERS.

    ``(a) In General.--For purposes of section 38, in the case of a 
small employer, the health benefits plan implementation credit 
determined under this section for the taxable year is an amount equal 
to the amount paid or incurred by the taxpayer during the taxable year 
for qualified health benefits expenses.
    ``(b) Limitation.--The credit determined under subsection (a) with 
respect to any taxpayer for any taxable year shall not exceed the 
excess of--
            ``(1) $1,500, over
            ``(2) sum of the credits determined under subsection (a) 
        with respect to such taxpayer for all preceding taxable years.
    ``(c) Qualified Health Benefits Expenses.--For purposes of this 
section, the term `qualified health benefits expenses' means, with 
respect to any taxable year, amounts paid or incurred by the taxpayer 
during such taxable year for--
            ``(1) establishing auto-enrollment which meets the 
        requirements of section x of the short title for coverage of a 
        participant or beneficiary under a group health plan, or health 
        insurance coverage offered in connection with such a plan, and
            ``(2) implementing the employer contribution option for 
        health insurance coverage pursuant to section 5000(e)(2).
    ``(d) Qualified Small Employer.--For purposes of this section, the 
term `qualified small employer' means any employer for any taxable year 
if the number of employees employed by such employer during such 
taxable year does not exceed 50. All employers treated as a single 
employer under subsection (a) or (b) of section 52 shall be treated as 
a single employer for purposes of this section.
    ``(e) No Double Benefit.--No deduction or credit shall be allowed 
under any other provision of this chapter with respect to the amount of 
the credit determined under this section.
    ``(f) Termination.--Subsection (a) shall not apply to any taxable 
year beginning after the date which is 2 years after the date of the 
enactment of this section.''.
    (b) Credit To Be Part of General Business Credit.--Subsection (b) 
of section 38 of the Internal Revenue Code of 1986, as amended by 
section 2, is amended by striking ``plus'' at the end of paragraph 
(34), by striking the period at the end of paragraph (35) and inserting 
``, plus'', and by adding at the end the following new paragraph:
            ``(36) in the case of a small employer (as defined in 
        section 45R(d)), the health benefits plan implementation credit 
        determined under section 45R(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986, as amended by section 2, is amended by inserting after the item 
relating to section 45Q the following new item:

``Sec. 45R. Auto-enrollment and defined contribution option for health 
                            benefits plans of small employers.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

             TITLE II--HEALTH CARE ACCESS AND AVAILABILITY

    Subtitle A--Health Insurance Pooling Mechanisms for Individuals

SEC. 201. FEDERAL GRANTS FOR STATE INSURANCE EXPENDITURES.

    (a) In General.--Subject to the succeeding provisions of this 
section, each State shall receive from the Secretary of Health and 
Human Services (in this subtitle referred to as the ``Secretary'') a 
grant for the State's providing for the use, in connection with 
providing health benefits coverage, of a qualifying high-risk pool or a 
reinsurance pool or other risk-adjustment mechanism used for the 
purpose of subsidizing the purchase of private health insurance.
    (b) Funding Amount.--
            (1) In general.--There are hereby appropriated, out of any 
        funds in the Treasury not otherwise appropriated, 
        $1,000,000,000 for each of fiscal years 2016, 2017, and 2018 
        for grants under this section. Such amount shall be divided 
        among the States as determined by the Secretary.
            (2) Construction.--Nothing in this section shall be 
        construed as preventing a State from using funding under 
        section 2745 of the Public Health Service Act for purposes of 
        funding reinsurance or other risk mechanisms.
    (c) Limitation.--Funding under subsection (a) may only be used for 
the following:
            (1) Qualifying high-risk pools.--
                    (A) Current pools.--A qualifying high-risk pool 
                created before the date of the enactment of this Act 
                that only covers high-risk populations and individuals 
                (and their spouse and dependents) receiving a health 
                care tax credit under section 35 of the Internal 
                Revenue Code of 1986 for a limited period of time as 
                determined by the Secretary or under section 2741 of 
                Public Health Service Act.
                    (B) New pools.--A qualifying high-risk pool created 
                on or after such date that only covers populations and 
                individuals described in subparagraph (A) if the pool--
                            (i) offers at least the option of one or 
                        more high-deductible plan options, in 
                        combination with a contribution into a health 
                        savings account;
                            (ii) offers multiple competing health plan 
                        options; and
                            (iii) covers only high-risk populations.
            (2) Risk insurance pool or other risk-adjustment 
        mechanisms.--
                    (A) Current reinsurance.--A reinsurance pool, or 
                other risk-adjustment mechanism, created before the 
                date of the enactment of this Act that only covers 
                populations and individuals described in paragraph 
                (1)(A).
                    (B) New pools.--A reinsurance pool or other risk-
                adjustment mechanism created on or after such date that 
                provides reinsurance only covers populations and 
                individuals described in paragraph (1)(A) and only on a 
                prospective basis under which a health insurance issuer 
                cedes covered lives to the pool in exchange for payment 
                of a reinsurance premium.
            (3) Transition.--Nothing in this section shall be construed 
        as preventing a State from using funds available to transition 
        from an existing high-risk pool to a reinsurance pool.
    (d) Bonus Payments.--With respect to any amounts made available to 
the States under this section, the Secretary shall set aside a portion 
of such amounts that shall only be available for the following 
activities by such States:
            (1) Providing guaranteed availability of individual health 
        insurance coverage to certain individuals with prior group 
        coverage under part B of title XXVII of the Public Health 
        Service Act.
            (2) A reduction in premium trends, actual premiums, or 
        other cost-sharing requirements.
            (3) An expansion or broadening of the pool of high-risk 
        individuals eligible for coverage.
            (4) States that adopt the Model Health Plan for Uninsurable 
        Individuals Act of the National Association of Insurance 
        Commissioners (if and when updated by such Association).
The Secretary may request such Association to update such Model Health 
Plan as needed by 2015.
    (e) Requirements for Receipt of Bonus Payments.--The requirements 
of this subsection, for the availability of bonus payments to a State 
under subsection (d), are as follows, in the case of an individual who 
is covered under a high-risk pool or other pool or mechanism described 
in subsection (b) operating in the State for which funds under this 
section may be applied:
            (1) Limitation on annual premiums for each individual based 
        on adjusted gross family income.--The premiums imposed for 
        coverage of each individual under health insurance coverage 
        offered through such pool or mechanism may not exceed (on an 
        annual basis) the following:
                    (A) If the adjusted gross income (as defined in 
                section 62 of the Internal Revenue Code of 1986) of all 
                individuals in the individual's family does not exceed 
                the poverty line (as defined in section 673(2) of the 
                Community Services Block Grant Act (42 U.S.C. 9902(2)), 
                including any revision required by such section) 
                applicable to a family of the size involved, 2 percent 
                of such income.
                    (B) If such adjusted gross income for all 
                individuals in the individual's family exceeds such 
                applicable poverty line, the sum of--
                            (i) 2 percent of such applicable poverty 
                        line; and
                            (ii) 10 percent of the amount of such 
                        income that exceeds such applicable poverty 
                        line.
            (2) Limitation on annual out-of-pocket costs for each 
        individual.--There shall be a limit on the annual out-of-pocket 
        expenditures (including annual premiums) for each individual 
        for coverage under such pool or mechanism equal to twice the 
        maximum allowable premiums for such individual permitted under 
        paragraph (1).
    (f) Administration.--The Secretary shall provide for the 
administration of this section and may establish such terms and 
conditions, including the requirement of an application, as may be 
appropriate to carry out this section.
    (g) Construction.--Nothing in this section shall be construed as 
requiring a State to operate a reinsurance pool (or other risk-
adjustment mechanism) under this section or as preventing a State from 
operating such a pool or mechanism through one or more private 
entities.
    (h) Definitions.--In this section:
            (1) Qualifying high-risk pool.--The term ``qualifying high-
        risk pool'' means any qualified high-risk pool (as defined in 
        subsection (g)(1)(A) of section 2745 of the Public Health 
        Service Act) that meets the conditions to receive a grant under 
        section (b)(1) of such section.
            (2) Reinsurance pool or other risk-adjustment mechanism 
        defined.--The term ``reinsurance pool or other risk-adjustment 
        mechanism'' means any State-based risk spreading mechanism to 
        subsidize the purchase of private health insurance for the 
        high-risk population.
            (3) High-risk population.--The term ``high-risk 
        population'' means--
                    (A) individuals who, by reason of the existence or 
                history of a medical condition, are able to acquire 
                health coverage only at rates which are at least 150 
                percent of the standard risk rates for such coverage 
                (in a non-community-rated non-guaranteed issue State), 
                and
                    (B) individuals who are provided health coverage by 
                a high-risk pool.
            (4) State defined.--The term ``State'' includes the 
        District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, and the Northern Mariana Islands.
    (i) Extending Funding.--Section 2745(d)(2) of the Public Health 
Service Act (42 U.S.C. 300gg-45(d)(2)) is amended--
            (1) in the heading, by inserting ``and 2016 through 2018'' 
        after ``2010''; and
            (2) by inserting ``and for each of fiscal years 2016 
        through 2018'' after ``for each of fiscal years 2007 through 
        2010''.
    (j) Sunset.--Funds made available under this section shall not be 
used for the purpose of subsidizing the purchase of private health 
insurance on or after October 1, 2018.

SEC. 202. POOL REFORM FOR INDIVIDUAL MEMBERSHIP EXPANSION.

    The Public Health Service Act, as amended by section 2, is further 
amended by inserting after title XXX the following new title:

     ``TITLE XXXI--POOL REFORM FOR INDIVIDUAL MEMBERSHIP EXPANSION

``SEC. 3100. PURPOSE.

    ``The purpose of this title is to provide, through the 
establishment of independent health pools (referred to in this title as 
`IHP'), for the reform of, and expansion of enrollment in, health 
insurance coverage for individuals and small employers.

``SEC. 3101. DEFINITION OF INDEPENDENT HEALTH POOL.

    ``(a) In General.--For purposes of this title, the terms 
`individual health pool' and `IHP' mean a legal nonprofit entity that 
meets the following requirements:
            ``(1) Organization.--The IHP--
                    ``(A) has been formed and maintained in good faith 
                for a purpose that includes the formation of a risk 
                pool in order to offer health insurance coverage to its 
                members;
                    ``(B) does not condition membership in the IHP on 
                any health status-related factor relating to an 
                individual (including an employee of an employer or a 
                dependent of an employee);
                    ``(C) does not make health insurance coverage 
                offered through the IHP available other than in 
                connection with a member of the IHP;
                    ``(D) is not a health insurance issuer; and
                    ``(E) does not receive any consideration directly 
                or indirectly from any health insurance issuer in 
                connection with the enrollment of any individuals, or 
                employees of employers, in any health insurance 
                coverage, except in conjunction with services offered 
                through the IHP.
            ``(2) Offering health benefits coverage.--
                    ``(A) Different groups.--The IHP, in conjunction 
                with those health insurance issuers that offer health 
                benefits coverage through the IHP, makes available 
                health benefits coverage in the manner described in 
                subsection (b) to all members of the IHP and the 
                dependents of such members (and, in the case of small 
                employers, employees and their dependents) in the 
                manner described in subsection (c)(2) at rates that are 
                established by the health insurance issuer on a policy 
                or product specific basis and that may vary for 
                individuals covered through an IHP.
                    ``(B) Nondiscrimination in coverage offered.--
                            ``(i) In general.--Subject to clause (ii), 
                        the IHP may not offer health benefits coverage 
                        to a member of an IHP unless the same coverage 
                        is offered to all such members of the IHP.
                            ``(ii) Construction.--Nothing in this title 
                        shall be construed as requiring or permitting a 
                        health insurance issuer to provide coverage 
                        outside the service area of the issuer, as 
                        approved under State law, or preventing a 
                        health insurance issuer from underwriting or 
                        from excluding or limiting the coverage on any 
                        individual, subject to the requirement of 
                        section 2741 (relating to guaranteed 
                        availability of individual health insurance 
                        coverage to certain individuals with prior 
                        group coverage).
                    ``(C) No assumption of insurance risk by ihp.--The 
                IHP provides health benefits coverage only through 
                contracts with health insurance issuers and does not 
                assume insurance risk with respect to such coverage.
            ``(3) Geographic areas.--Nothing in this title shall be 
        construed as preventing the establishment and operation of more 
        than one IHP in a geographic area or as limiting the number of 
        IHPs that may operate in any area.
            ``(4) Provision of administrative services to purchasers.--
        The IHP may provide administrative services for members. Such 
        services may include accounting, billing, and enrollment 
        information.
    ``(b) Health Benefits Coverage Requirements.--
            ``(1) Compliance with consumer protection requirements.--
        Except as provided in section 3102, any health benefits 
        coverage offered through an IHP--
                    ``(A) shall be issued by a health insurance issuer 
                that meets all applicable State standards relating to 
                consumer protection;
                    ``(B) shall be approved or otherwise permitted to 
                be offered under State law; and
                    ``(C) may not impose any exclusion of a specific 
                disease from such coverage.
            ``(2) Wellness bonuses for health promotion.--Nothing in 
        this title shall be construed as precluding a health insurance 
        issuer offering health benefits coverage through an IHP from 
        establishing premium discounts or rebates for members or from 
        modifying otherwise applicable copayments or deductibles in 
        return for adherence to programs of health promotion and 
        disease prevention so long as such programs are agreed to in 
        advance by the IHP and comply with all other provisions of this 
        title and do not discriminate among similarly situated members.
    ``(c) Members; Health Insurance Issuers.--
            ``(1) Members.--
                    ``(A) In general.--Under rules established to carry 
                out this title, with respect to an individual or small 
                employer who is a member of an IHP, the individual may 
                enroll for health benefits coverage (including coverage 
                for dependents of such individual) or employer may 
                enroll employees for health benefits coverage 
                (including coverage for dependents of such employees) 
                offered by a health insurance issuer through the IHP.
                    ``(B) Rules for enrollment.--Nothing in this 
                paragraph shall preclude an IHP from establishing rules 
                of enrollment and reenrollment of members. Such rules 
                shall be applied consistently to all members within the 
                IHP and shall not be based in any manner on health 
                status-related factors.
            ``(2) Health insurance issuers.--The contract between an 
        IHP and a health insurance issuer shall provide, with respect 
        to a member enrolled with health benefits coverage offered by 
        the issuer through the IHP, for the payment to the issuer of 
        the premiums (if any) collected by the IHP for health insurance 
        coverage offered by the issuer.

``SEC. 3102. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.

    ``(a) Preemption of State Laws Restricting Formation of IHPs.--Any 
State law or regulation relating to the composition or organization of 
an IHP is preempted to the extent the law or regulation is inconsistent 
with the provisions of this title.
    ``(b) Preemption of State Requirements Relating to Health Benefit 
Coverage.--
            ``(1) Benefit requirements.--
                    ``(A) In general.--Subject to subparagraph (B), 
                State laws are superseded, and shall not apply to 
                health benefits coverage made available through an IHP, 
                insofar as such laws impose benefit requirements for 
                such coverage, including requirements relating to 
                coverage of specific providers, specific services or 
                conditions, or the amount, duration, or scope of 
                benefits.
                    ``(B) Exception for federally imposed requirements 
                and for requirements prohibiting disease-specific 
                exclusions.--Subparagraph (A) shall not apply to a 
                requirement to the extent the requirement--
                            ``(i) implements title XXVII or other 
                        Federal law; or
                            ``(ii) prohibits imposition of an exclusion 
                        of a specific disease from health benefits 
                        coverage.
            ``(2) Other requirements preventing offering of coverage 
        through an ihp.--State laws are superseded, and shall not apply 
        to health benefits coverage made available through an IHP, 
        insofar as such laws impose any other requirements (including 
        limitations on compensation arrangements) that, directly or 
        indirectly, preclude (or have the effect of precluding) the 
        offering of such coverage through an IHP, if the IHP meets the 
        requirements of this title.
    ``(c) Preemption of State Premium Rating Requirements.--State laws 
are superseded, and shall not apply to the premiums imposed for health 
benefits coverage made available through an IHP, insofar as such laws 
impose restrictions on the variation of premiums among such coverage 
offered to members of the IHP.

``SEC. 3103. DEFINITIONS.

    ``For purposes of this title:
            ``(1) Dependent.--The term `dependent', as applied to 
        health insurance coverage offered by a health insurance issuer 
        licensed (or otherwise regulated) in a State, shall have the 
        meaning applied to such term with respect to such coverage 
        under the laws of the State relating to such coverage and such 
        an issuer. Such term may include the spouse and children of the 
        individual involved.
            ``(2) Health benefits coverage.--The term `health benefits 
        coverage' has the meaning given the term health insurance 
        coverage in section 2791(b)(1), and does not include excepted 
        benefits (as defined in section 2791(c)).
            ``(3) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given such term in section 2791(b)(2).
            ``(4) Health status-related factor.--The term `health 
        status-related factor' has the meaning given such term in 
        section 2791(d)(9).
            ``(5) Member.--The term `member' means, with respect to an 
        IHP, an individual or small employer who is a member of the 
        legal entity described in section 3101(a)(1) to which the IHP 
        is offering coverage.
            ``(6) Small employer.--The term `small employer' has the 
        meaning given such term in section 712(c)(1)(B) of the Employee 
        Retirement and Income Security Act of 1974.''.

               Subtitle B--Small Business Health Fairness

SEC. 211. SHORT TITLE.

    This subtitle may be cited as the ``Small Business Health Fairness 
Act of 2015''.

SEC. 212. 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--
            ``(1) a plan which offered such coverage on the date of the 
        enactment of the Small Business Health Fairness Act of 2015;
            ``(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 2015.
                    ``(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 2015, 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 health 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 
                        health 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 health 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 in 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 2015, 
        the applicable authority shall establish a Solvency Standards 
        Working Group. In prescribing the initial regulations under 
        this section, the applicable authority shall take into account 
        the recommendations of such Working Group.
            ``(2) Membership.--The Working Group shall consist of not 
        more than 15 members appointed by the applicable authority. The 
        applicable authority shall include among persons invited to 
        membership on the Working Group at least one of each of the 
        following:
                    ``(A) A representative of the National Association 
                of Insurance Commissioners.
                    ``(B) A representative of the American Academy of 
                Actuaries.
                    ``(C) A representative of the State governments, or 
                their interests.
                    ``(D) A representative of existing self-insured 
                arrangements, or their interests.
                    ``(E) A representative of associations of the type 
                referred to in section 801(b)(1), or their interests.
                    ``(F) A representative of multiemployer plans that 
                are group health plans, or their interests.

``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 health 
                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 health 
                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 health 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 Health 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 
health actuary who shall be responsible for the preparation of the 
materials comprising information necessary to be submitted by a 
qualified health actuary under this part. The qualified health 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 health 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 health 
actuary engaged by the plan, and such actuary shall, not later than the 
end of the 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 
2015.
    ``(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 health actuary.--The term `qualified 
        health actuary' means an individual who is a member of the 
        American Academy of Actuaries with expertise in health care.
            ``(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 2015, 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.
            ``(3) Exception for certain benefits.--The requirements of 
        this part shall not apply to a group health plan in relation to 
        its provision of excepted benefits, as defined in section 
        706(c).''.
    (b) Conforming Amendments to Preemption Rules.--
            (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
        amended by adding at the end the following new subparagraph:
    ``(E) The preceding subparagraphs of this paragraph do not apply 
with respect to any State law in the case of an association health plan 
which is certified under part 8.''.
            (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
                    (A) in subsection (b)(4), by striking ``Subsection 
                (a)'' and inserting ``Subsections (a) and (d)'';
                    (B) in subsection (b)(5), by striking ``subsection 
                (a)'' in subparagraph (A) and inserting ``subsection 
                (a) of this section and subsections (a)(2)(B) and (b) 
                of section 805'', and by striking ``subsection (a)'' in 
                subparagraph (B) and inserting ``subsection (a) of this 
                section or subsection (a)(2)(B) or (b) of section 
                805'';
                    (C) by redesignating subsection (d) as subsection 
                (e); and
                    (D) by inserting after subsection (c) the following 
                new subsection:
    ``(d)(1) Except as provided in subsection (b)(4), the provisions of 
this title shall supersede any and all State laws insofar as they may 
now or hereafter preclude, or have the effect of precluding, a health 
insurance issuer from offering health insurance coverage in connection 
with an association health plan which is certified under part 8.
    ``(2) Except as provided in paragraphs (4) and (5) of subsection 
(b) of this section--
            ``(A) In any case in which health insurance coverage of any 
        policy type is offered under an association health plan 
        certified under part 8 to a participating employer operating in 
        such State, the provisions of this title shall supersede any 
        and all laws of such State insofar as they may preclude a 
        health insurance issuer from offering health insurance coverage 
        of the same policy type to other employers operating in the 
        State which are eligible for coverage under such association 
        health plan, whether or not such other employers are 
        participating employers in such plan.
            ``(B) In any case in which health insurance coverage of any 
        policy type is offered in a State under an association health 
        plan certified under part 8 and the filing, with the applicable 
        State authority (as defined in section 812(a)(9)), of the 
        policy form in connection with such policy type is approved by 
        such State authority, the provisions of this title shall 
        supersede any and all laws of any other State in which health 
        insurance coverage of such type is offered, insofar as they may 
        preclude, upon the filing in the same form and manner of such 
        policy form with the applicable State authority in such other 
        State, the approval of the filing in such other State.
    ``(3) Nothing in subsection (b)(6)(E) or the preceding provisions 
of this subsection shall be construed, with respect to health insurance 
issuers or health insurance coverage, to supersede or impair the law of 
any State--
            ``(A) providing solvency standards or similar standards 
        regarding the adequacy of insurer capital, surplus, reserves, 
        or contributions, or
            ``(B) relating to prompt payment of claims.
    ``(4) For additional provisions relating to association health 
plans, see subsections (a)(2)(B) and (b) of section 805.
    ``(5) For purposes of this subsection, the term `association health 
plan' has the meaning provided in section 801(a), and the terms `health 
insurance coverage', `participating employer', and `health insurance 
issuer' have the meanings provided such terms in section 812, 
respectively.''.
            (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
        1144(b)(6)(A)) is amended--
                    (A) in clause (i)(II), by striking ``and'' at the 
                end;
                    (B) in clause (ii)--
                            (i) by inserting ``and which does not 
                        provide medical care (within the meaning of 
                        section 733(a)(2)),'' after ``arrangement,''; 
                        and
                            (ii) 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 2015 
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. 1022(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, 2018, 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. 213. 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)), 2 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 2 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 2 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. 214. 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--
            (1) by inserting ``(a) In General.--'' before ``In 
        accordance''; and
            (2) 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. 215. 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. 216. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

    (a) Effective Date.--The amendments made by this subtitle shall 
take effect 1 year after the date of the enactment of this Act. The 
Secretary of Labor shall first issue all regulations necessary to carry 
out the amendments made by this subtitle within 1 year after the date 
of the enactment of this Act.
    (b) Treatment of Certain Existing Health Benefits Programs.--
            (1) In general.--In any case in which, as of the date of 
        the enactment of this Act, an arrangement is maintained in a 
        State for the purpose of providing benefits consisting of 
        medical care for the employees and beneficiaries of its 
        participating employers, at least 200 participating employers 
        make contributions to such arrangement, such arrangement has 
        been in existence for at least 10 years, and such arrangement 
        is licensed under the laws of one or more States to provide 
        such benefits to its participating employers, upon the filing 
        with the applicable authority (as defined in section 812(a)(5) 
        of the Employee Retirement Income Security Act of 1974 (as 
        amended by this subtitle)) by the arrangement of an application 
        for certification of the arrangement under part 8 of subtitle B 
        of title I of such Act--
                    (A) such arrangement shall be deemed to be a group 
                health plan for purposes of title I of such Act;
                    (B) the requirements of sections 801(a) and 803(a) 
                of the Employee Retirement Income Security Act of 1974 
                shall be deemed met with respect to such arrangement;
                    (C) the requirements of section 803(b) of such Act 
                shall be deemed met, if the arrangement is operated by 
                a board of directors which--
                            (i) is elected by the participating 
                        employers, with each employer having one vote; 
                        and
                            (ii) has complete fiscal control over the 
                        arrangement and which is responsible for all 
                        operations of the arrangement;
                    (D) the requirements of section 804(a) of such Act 
                shall be deemed met with respect to such arrangement; 
                and
                    (E) the arrangement may be certified by any 
                applicable authority with respect to its operations in 
                any State only if it operates in such State on the date 
                of certification.
        The provisions of this subsection shall cease to apply with 
        respect to any such arrangement at such time after the date of 
        the enactment of this Act as the applicable requirements of 
        this subsection are not met with respect to such arrangement.
            (2) Definitions.--For purposes of this subsection, the 
        terms ``group health plan'', ``medical care'', and 
        ``participating employer'' shall have the meanings provided in 
        section 812 of the Employee Retirement Income Security Act of 
        1974, except that the reference in paragraph (7) of such 
        section to an ``association health plan'' shall be deemed a 
        reference to an arrangement referred to in this subsection.

                  Subtitle C--Health Insurance Reforms

SEC. 221. REQUIREMENTS FOR INDIVIDUAL HEALTH INSURANCE.

    (a) In General.--Section 2741 of the Public Health Service Act (42 
U.S.C. 300gg-41), as restored and revived by section 2 of this Act, is 
amended--
            (1) in subsection (a)--
                    (A) in the heading, by striking ``to certain 
                individuals with prior group coverage'';
                    (B) in paragraph (1), by striking ``and section 
                2744'';
                    (C) in paragraph (1)(B), by inserting ``unless such 
                exclusion complies with paragraph (2)'' before the 
                period; and
                    (D) by striking paragraph (2) and inserting the 
                following new paragraphs:
            ``(2) Limitation on preexisting condition exclusion 
        period.--
                    ``(A) Limitation.--A health insurance issuer 
                offering health insurance coverage in the individual 
                market may not, with respect to an enrollee in such 
                coverage, impose any preexisting condition exclusion if 
                such enrollee has at least 18 months of continuous 
                creditable coverage (as defined in section 2701(c)(1)) 
                immediately preceding the enrollment date.
                    ``(B) Imposition of exclusion.--Notwithstanding 
                paragraph (1)(B), a health insurance issuer offering 
                health insurance coverage in the individual market may, 
                with respect to an enrollee in such coverage who is not 
                described in subparagraph (A), impose a preexisting 
                condition exclusion only if--
                            ``(i) such exclusion relates to a condition 
                        (whether physical or mental), regardless of the 
                        cause of the condition, for which medical 
                        advice, diagnosis, care, or treatment was 
                        recommended or received within the 6-month 
                        period ending on the enrollment date;
                            ``(ii) such exclusion extends for a period 
                        of not more than 18 months after the enrollment 
                        date; and
                            ``(iii) the period of any such preexisting 
                        condition exclusion is reduced by the aggregate 
                        of the periods of creditable coverage (if any, 
                        as defined in section 2701(c)(1)) applicable to 
                        the enrollee as of the enrollment date.
                    ``(C) Premium surcharge.--Notwithstanding paragraph 
                (6), with respect to an enrollee described in 
                subparagraph (B), a health insurance issuer may charge 
                a premium for the coverage involved that does not 
                exceed 150 percent of the applicable standard rate, for 
                not to exceed 2 years (or 3 years if the health 
                insurance issuer does not impose any preexisting 
                condition exclusion with respect to such enrollee), 
                reduced by the aggregate of the periods of creditable 
                coverage (if any, as defined in section 2701(c)(1)) 
                applicable to the enrollee as of the enrollment date. 
                For purposes of this subsection, the term `applicable 
                standard rate' means the standard premium rate that the 
                issuer charges for the coverage involved with respect 
                to an individual described in subparagraph (A) with the 
                same rating characteristics or rating factors as the 
                enrollee described in subparagraph (B), provided that 
                any variations in standard premium rates are based on 
                the uniform application of rating characteristics or 
                rating factors that are permitted by State law and are 
                not otherwise prohibited by paragraph (6).
            ``(3) Exceptions.--Notwithstanding paragraph (2), and 
        subject to subparagraph (D), a health insurance issuer offering 
        health insurance coverage in the individual market, may not 
        impose any of the following preexisting condition exclusion:
                    ``(A) Exclusion not applicable to certain 
                newborns.--In the case of an individual who, as of the 
                last day of the 30-day period beginning with the date 
                of birth, is a dependent of an enrollee in such 
                coverage.
                    ``(B) Exclusion not applicable to certain adopted 
                children.--In the case of a child who is adopted or 
                placed for adoption before attaining 18 years of age 
                and who, as of the last day of the 30-day period 
                beginning on the date of the adoption or placement for 
                adoption, is a dependent of an enrollee in such 
                coverage. The previous sentence shall not apply to 
                coverage before the date of such adoption or placement 
                for adoption.
                    ``(C) Exclusion not applicable to pregnancy.--
                Relating to pregnancy as a preexisting condition.
                    ``(D) Loss if break in coverage.--Subparagraphs (A) 
                and (B) shall no longer apply to an individual after 
                the end of the first 63-day period during all of which 
                the individual was not covered under any creditable 
                coverage.
            ``(4) Open enrollment periods.--A health insurance issuer 
        offering health insurance coverage in the individual market may 
        limit the applicability of the provisions of paragraph (1) to 
        scheduled open enrollment periods, provided that--
                    ``(A) any such open enrollment period shall not be 
                less than 30 days;
                    ``(B) any period between scheduled open enrollment 
                periods shall not exceed 24 months; and
                    ``(C) such limitation shall not apply to any 
                individual who qualifies for a special enrollment 
                period under paragraph (5).
            ``(5) Special enrollment periods.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), a health insurance issuer offering health 
                insurance coverage in the individual market shall 
                permit an individual who is an eligible individual or a 
                dependent to enroll in coverage during a special 
                enrollment period if the individual experiences any of 
                the following qualifying events:
                            ``(i) For dependent beneficiaries.--The 
                        individual becomes, by reason of marriage, 
                        birth, adoption or placement for adoption, a 
                        dependent of an individual enrolled in a plan 
                        offered by the health insurance issuer and such 
                        individual otherwise qualifies, under the terms 
                        of the plan, as eligible for coverage as a 
                        dependent of such enrollee.
                            ``(ii) Loss of group coverage.--The 
                        individual loses coverage under a group health 
                        plan as a result of--
                                    ``(I) loss of eligibility for the 
                                coverage (including as a result of 
                                legal separation, divorce, death, 
                                attaining an age at which eligibility 
                                terminates, termination of employment, 
                                or reduction in the number of hours of 
                                employment); or
                                    ``(II) termination of the coverage 
                                by the plan sponsor.
                            ``(iii) Loss of individual coverage.--The 
                        individual loses individual market coverage as 
                        a result of--
                                    ``(I) discontinuation of a plan as 
                                a result of a health insurance issuer 
                                ceasing to offer coverage in the 
                                individual market in accordance with 
                                section 2742(c)(2);
                                    ``(II) expiration of COBRA, or 
                                other, continuation coverage;
                                    ``(III) ceasing to qualify, under 
                                the terms of the coverage, as a 
                                dependent (including as a result of 
                                legal separation, divorce, death, or 
                                attaining an age at which eligibility 
                                terminates); or
                                    ``(IV) permanently moving outside 
                                the State in which the coverage was 
                                issued, or in the case of a network 
                                plan, outside the plan's service area.
                            ``(iv) Loss of eligibility for a government 
                        coverage program.--The individual loses 
                        coverage by ceasing to be eligible for coverage 
                        under any of the following:
                                    ``(I) Part A or part B of title 
                                XVIII of the Social Security Act.
                                    ``(II) Title XIX of the Social 
                                Security Act, other than coverage 
                                consisting solely of benefits under 
                                section 1928 of such title.
                                    ``(III) Title XXI of the Social 
                                Security Act.
                                    ``(IV) Chapter 55 of title 10.
                                    ``(V) Chapter 89 of title 5.
                                    ``(VI) A State health benefits risk 
                                pool.
                    ``(B) Loss of coverage defined.--For purposes of 
                this paragraph, loss of coverage shall not include any 
                of the following:
                            ``(i) Voluntary termination of coverage by 
                        an individual, except if such termination is 
                        the result of circumstances described in clause 
                        (iii)(IV).
                            ``(ii) Termination of coverage by the 
                        issuer or the plan sponsor of the coverage for 
                        any reason described in paragraph (1) or (2) of 
                        section 2742(b).
                            ``(iii) Loss of any coverage that consists 
                        solely of coverage of excepted benefits (as 
                        defined in section 2791).
                    ``(C) Special enrollment period.--Any special 
                enrollment period shall not be less than 60 days and 
                shall begin on the date of the qualifying event.
            ``(6) Standard premium rates.--With respect to the premium 
        rate charged by a health insurance issuer for health insurance 
        coverage offered in the individual market, such rate, with 
        respect to the particular plan or coverage involved, shall not 
        vary based on any of the following health status-related 
        factors in relation to an eligible individual or dependent:
                    ``(A) Health status.
                    ``(B) Medical condition (including physical and 
                mental illnesses).
                    ``(C) Claims experience.
                    ``(D) Receipt of health care.
                    ``(E) Medical history.
                    ``(F) Genetic information.
                    ``(G) Evidence of insurability (including 
                conditions arising out of acts of domestic violence).
                    ``(H) Disability.'';
            (2) by amending subsection (b) to read as follows:
    ``(b) Definitions.--For purposes of this section:
            ``(1) Eligible individual.--The term `eligible individual' 
        means an individual who is eligible under applicable State law 
        to purchase individual health insurance coverage in the State.
            ``(2) Dependent.--The term `dependent' means an individual 
        who, under the terms of the coverage and applicable State law, 
        qualifies to enroll in such coverage as a dependent of an 
        individual described in paragraph (1).'';
            (3) by striking subsection (c); and
            (4) by redesignating subsection (d) and the first 
        subsection (e) as subsections (c) and (d), respectively.
    (b) Conforming Amendment.--Section 2744 of the Public Health 
Service Act (42 U.S.C. 300gg-44), as restored and revived by section 2 
of this Act, is repealed.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to health insurance coverage offered for plan years 
beginning after the date of the enactment of this Act.

           TITLE III--INTERSTATE MARKET FOR HEALTH INSURANCE

SEC. 301. COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE 
              COVERAGE.

    (a) In General.--Title XXVII of the Public Health Service Act (42 
U.S.C. 300gg et seq.), as restored by section 2, 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), but does not include excepted benefits 
        described in section 2791(c).
            ``(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 only the 50 States and 
        the District of Columbia.
            ``(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 2799 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. LIMITATION ON INDIVIDUAL PURCHASE IN SECONDARY STATE.

    ``Effective beginning 2 years after the date of enactment of this 
part, an individual in a State may not buy individual health insurance 
coverage in a secondary State if the premium for individual health 
insurance in the primary State (with respect to the individual) exceeds 
the national average premium by 10 percent or more.

``SEC. 2799. 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 paragraph 
        (1) 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 
                one 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. 2799A. ENFORCEMENT.

    ``(a) In General.--Subject to subsection (b), with respect to 
specific individual health insurance coverage the primary State for 
such coverage has sole jurisdiction to enforce the primary State's 
covered laws in the primary State and any secondary State.
    ``(b) Secondary State's Authority.--Nothing in subsection (a) shall 
be construed to affect the authority of a secondary State to enforce 
its laws as set forth in the exception specified in section 2796(b)(1).
    ``(c) Court Interpretation.--In reviewing action initiated by the 
applicable secondary State authority, the court of competent 
jurisdiction shall apply the covered laws of the primary State.
    ``(d) Notice of Compliance Failure.--In the case of individual 
health insurance coverage offered in a secondary State that fails to 
comply with the covered laws of the primary State, the applicable State 
authority of the secondary State may notify the applicable State 
authority of the primary State.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individual health insurance coverage offered, issued, or sold 
after the date that is one year after the date of the enactment of this 
Act.
    (c) GAO Ongoing Study and Reports.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct an ongoing study concerning the effect of the 
        amendment made by subsection (a) on--
                    (A) the number of uninsured and under-insured;
                    (B) the availability and cost of health insurance 
                policies for individuals with pre-existing medical 
                conditions;
                    (C) the availability and cost of health insurance 
                policies generally;
                    (D) the elimination or reduction of different types 
                of benefits under health insurance policies offered in 
                different States; and
                    (E) cases of fraud or abuse relating to health 
                insurance coverage offered under such amendment and the 
                resolution of such cases.
            (2) Annual reports.--The Comptroller General shall submit 
        to Congress an annual report, after the end of each of the 5 
        years following the effective date of the amendment made by 
        subsection (a), on the ongoing study conducted under paragraph 
        (1).
    (d) Severability.--If any provision of the section or the 
application of such provision to any person or circumstance is held to 
be unconstitutional, the remainder of this section and the application 
of the provisions of such to any other person or circumstance shall not 
be affected.

                    TITLE IV--LAWSUIT ABUSE REFORMS

SEC. 401. CHANGE IN BURDEN OF PROOF BASED ON COMPLIANCE WITH CLINICAL 
              PRACTICE GUIDELINES.

    (a) Selection and Issuance of Clinical Practices Guidelines.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        provide for the selection and issuance of clinical practice 
        guidelines for treatment of medical conditions (each in this 
        subsection referred to as a ``guideline'') in accordance with 
        paragraphs (2) and (3).
            (2) Development process.--Not later than 90 days after the 
        date of enactment of this title, the Secretary shall enter into 
        a contract with a qualified physician consensus-building 
        organization (such as the Physician Consortium for Performance 
        Improvement), in concert and agreement with physician specialty 
        organizations, to develop guidelines. The contract shall 
        require that the organization submit guidelines to the agency 
        not later than 18 months after the date of the enactment of 
        this title.
            (3) Issuance.--
                    (A) In general.--Not later than 2 years after the 
                date of the enactment of this title, the Secretary 
                shall, after notice and opportunity for public comment, 
                make a rule that provides for the issuance of the 
                guidelines submitted under paragraph (2).
                    (B) Limitation.--The Secretary may not make a rule 
                that includes guidelines other than those submitted 
                under paragraph (2).
                    (C) Dissemination.--The Secretary shall post such 
                guidelines on the public Internet Web site of the 
                Department of Health and Human Services.
            (4) Maintenance.--Not later than 4 years after the date of 
        enactment of this title, and every 2 years thereafter, the 
        Secretary shall review the guidelines and shall, as necessary, 
        enter into contracts similar to the contract described in 
        paragraph (2), and issue guidelines in a manner similar to the 
        issuance of guidelines under paragraph (3).
    (b) Use.--
            (1) Use by defendant to change the burden of proof.--If a 
        defendant in a health care lawsuit relating to treatment of an 
        individual establishes by a preponderance of the evidence that 
        the treatment was provided in a manner consistent with an 
        applicable guideline issued under subsection (a), the defendant 
        may not be held liable unless the plaintiff establishes the 
        liability of the defendant by clear and convincing evidence.
            (2) Limitation on introduction as evidence against a 
        defendant.--Guidelines issued under subsection (a) may not be 
        introduced as evidence of negligence or deviation in the 
        standard of care in any health care lawsuit unless they have 
        previously been introduced by the defendant.
            (3) No presumption of negligence against a defendant.--
        There shall be no presumption of negligence with respect to 
        treatment if a health care provider provides the treatment in a 
        manner inconsistent with such guidelines.
    (c) Construction.--Nothing in this section shall be construed as 
preventing a State from--
            (1) replacing their current medical malpractice rules with 
        rules that rely, as a defense, upon a health care provider's 
        compliance with a guideline issued under subsection (a); or
            (2) applying additional guidelines or limitations on 
        liability that are in addition to, but not in lieu of, the 
        guidelines issued under subsection (a).

SEC. 402. STATE GRANTS TO CREATE EXPERT PANELS AND ADMINISTRATIVE 
              HEALTH CARE TRIBUNALS.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the following:

``SEC. 399U. STATE GRANTS TO CREATE ADMINISTRATIVE HEALTH CARE 
              TRIBUNALS.

    ``(a) In General.--The Secretary may award grants to States for the 
development, implementation, and evaluation of administrative health 
care tribunals that comply with this section, for the resolution of 
disputes concerning injuries allegedly caused by health care providers.
    ``(b) Conditions for Demonstration Grants.--To be eligible to 
receive a grant under this section, a State shall submit to the 
Secretary an application at such time, in such manner, and containing 
such information as may be required by the Secretary. A grant shall be 
awarded under this section on such terms and conditions as the 
Secretary determines appropriate.
    ``(c) Representation by Counsel.--A State that receives a grant 
under this section may not preclude any party to a dispute before an 
administrative health care tribunal operated under such grant from 
obtaining legal representation during any review by the expert panel 
under subsection (d), the administrative health care tribunal under 
subsection (e), or a State court under subsection (f).
    ``(d) Expert Panel Review and Early Offer Guidelines.--
            ``(1) In general.--If, in any health care liability action 
        against a health care provider, the health care provider 
        alleges, in any response to the claimant's filing, that the 
        health care provider adhered to an applicable practice 
        guideline in the provision of health care items or services to 
        the claimant, then further proceedings on the health care 
        liability action shall be suspended prior to discovery 
        proceedings, until the completion of a review of the action by 
        an independent expert panel in accordance with this subsection.
            ``(2) Composition.--
                    ``(A) In general.--The members of each expert panel 
                under this subsection shall be appointed by the head of 
                the State agency responsible for health. Each expert 
                panel shall be composed of no fewer than 3 members and 
                not more than 5 members. At least one-half of such 
                members shall be medical experts (either physicians or 
                health care professionals).
                    ``(B) Licensure and expertise.--Each physician or 
                health care professional appointed to an expert panel 
                under subparagraph (A) shall--
                            ``(i) be appropriately credentialed or 
                        licensed in one or more States to deliver 
                        health care services; and
                            ``(ii) typically treat the condition, make 
                        the diagnosis, or provide the type of treatment 
                        that is under review.
                    ``(C) Independence.--
                            ``(i) In general.--Subject to clause (ii), 
                        each individual appointed to an expert panel 
                        under this paragraph shall--
                                    ``(I) not have a material familial, 
                                financial, or professional relationship 
                                with a party involved in the dispute 
                                reviewed by the panel; and
                                    ``(II) not otherwise have a 
                                conflict of interest with such a party.
                            ``(ii) Exception.--Nothing in clause (i) 
                        shall be construed to prohibit an individual 
                        who has staff privileges at an institution 
                        where the treatment involved in the dispute was 
                        provided from serving as a member of an expert 
                        panel merely on the basis of such affiliation, 
                        if the affiliation is disclosed to the parties 
                        and neither party objects.
                    ``(D) Practicing health care professional in same 
                field.--
                            ``(i) In general.--In a dispute before an 
                        expert panel that involves treatment, or the 
                        provision of items or services--
                                    ``(I) by a physician, the medical 
                                experts on the expert panel shall be 
                                practicing physicians (allopathic or 
                                osteopathic) of the same or similar 
                                specialty as a physician who typically 
                                treats the condition, makes the 
                                diagnosis, or provides the type of 
                                treatment under review; or
                                    ``(II) by a health care 
                                professional other than a physician, at 
                                least 2 medical experts on the expert 
                                panel shall be practicing physicians 
                                (allopathic or osteopathic) of the same 
                                or similar specialty as the health care 
                                professional who typically treats the 
                                condition, makes the diagnosis, or 
                                provides the type of treatment under 
                                review, and, if determined appropriate 
                                by the State agency, an additional 
                                medical expert shall be a practicing 
                                health care professional (other than 
                                such a physician) of such a same or 
                                similar specialty.
                            ``(ii) Practicing defined.--In 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 
                        a week.
                    ``(E) Pediatric expertise.--In the case of dispute 
                relating to a child, at least 1 medical expert on the 
                expert panel shall have expertise described in 
                subparagraph (D)(i) in pediatrics.
                    ``(F) No civil liability for members.--No civil 
                action shall be brought in any court against any member 
                of an expert panel for any act done, failure to act, or 
                statement or opinion made, within the scope of the 
                individual's duties as a member of the expert panel.
            ``(3) Determination.--
                    ``(A) In general.--After a review under paragraph 
                (1), an expert panel shall make a determination as to 
                the liability of the parties involved and compensation.
                    ``(B) Considerations in making determinations.--In 
                making a determination under this subsection as to the 
                liability of parties involved and compensation, the 
                following shall apply:
                            ``(i) Treatment of clinical practice 
                        guidelines.--An expert panel shall acknowledge 
                        the ability of physicians to depart from the 
                        recommendations in clinical practice 
                        guidelines, when appropriate, in the care of 
                        individual patients.
                            ``(ii) Limitation.--An expert panel shall 
                        not make a finding of negligence from the mere 
                        fact that a treatment or procedure was 
                        unsuccessful or failed to bring the best 
                        result.
            ``(4) Early offer.--If the parties to a dispute before an 
        expert panel under this subsection accept the determination of 
        the expert panel concerning liability and compensation, such 
        compensation shall be paid to the claimant and the claimant 
        shall agree to forgo any further action against the health care 
        providers involved.
            ``(5) Failure to accept.--If any party decides not to 
        accept the expert panel's determination, the matter shall be 
        referred to an administrative health care tribunal created 
        pursuant to this section.
    ``(e) Administrative Health Care Tribunals.--
            ``(1) In general.--Upon the failure of any party to accept 
        the determination of an expert panel under subsection (d), the 
        parties shall have the right to request a hearing concerning 
        the liability or compensation involved by an administrative 
        health care tribunal established by the State involved.
            ``(2) Requirements.--In establishing an administrative 
        health care tribunal under this section, a State shall--
                    ``(A) ensure that such tribunals are presided over 
                by special judges with health care expertise;
                    ``(B) provide authority to such judges to make 
                binding rulings, rendered in written decisions, on 
                standards of care, causation, compensation, and related 
                issues with reliance on independent expert witnesses 
                commissioned by the tribunal;
                    ``(C) establish gross negligence as the legal 
                standard for the tribunal; and
                    ``(D) allow the admission into evidence of the 
                recommendation made by the expert panel under 
                subsection (d).
    ``(f) Review by State Court After Exhaustion of Administrative 
Remedies.--
            ``(1) Right to file.--If any party to a dispute before a 
        health care tribunal under subsection (e) is not satisfied with 
        the determinations of the tribunal, the party shall have the 
        right to file their claim in a State court of competent 
        jurisdiction.
            ``(2) Forfeit of awards.--Any party filing an action in a 
        State court in accordance with paragraph (1) shall forfeit any 
        compensation award made under subsection (e).
            ``(3) Admissibility.--The determinations of the expert 
        panel and the administrative health care tribunal pursuant to 
        subsections (d) and (e) with respect to a State court 
        proceeding under paragraph (1) shall be admissible into 
        evidence in any such State court proceeding.
            ``(4) Treatment of certain expert panel and administrative 
        health care tribunal findings.--
                    ``(A) Work product.--No finding by an expert panel 
                under subsection (d) or administrative health care 
                tribunal under subsection (e) that the defendant 
                applicable eligible professional breached the standard 
                of care as set forth under the prescribed practice 
                guidelines shall constitute negligence per se or 
                conclusive evidence of liability.
                    ``(B) Finding relating to clinical practice 
                guidelines.--If an administrative health care tribunal 
                did not make a finding under subsection (e) that there 
                was an applicable clinical practice guideline that the 
                defendant adhered to, with respect to the State court 
                proceeding under paragraph (1) the State court may 
                issue summary judgment in favor of the defendant health 
                care professional unless the claimant is able to show 
                otherwise by clear and convincing evidence. If an 
                administrative health care tribunal made a finding 
                under subsection (e) that there was an applicable 
                clinical practice guideline that the defendant adhered 
                to, with respect to a State court proceeding under 
                paragraph (1) the State court shall issue summary 
                judgment in favor of the applicable health care 
                professional unless the claimant is able to show 
                otherwise by clear and convincing evidence.
                    ``(C) Finding relating to standard of care.--Any 
                finding of an expert panel or administrative health 
                care tribunal under subsection (d) or (e), 
                respectively, that the defendant did not breach the 
                standard of care as set forth under the prescribed 
                clinical practice guidelines or that the defendant's 
                failure to conform to the required standard was neither 
                the cause in fact nor the proximate cause of the 
                plaintiff's injury or that the plaintiff did not incur 
                any damages as a result shall be given deference by the 
                State court involved and shall entitle the defendant to 
                summary judgment unless the plaintiff is able to show 
                by clear and convincing evidence that the expert panel 
                or health care tribunal, respectively, was in error and 
                that there is a genuine issue as to a material fact in 
                the case.
    ``(g) Definition.--In this section, 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.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated for any fiscal year such sums as may be necessary for 
purposes of making grants to States under this section.''.

SEC. 403. PAYMENT OF DAMAGES AND RECOVERY OF COSTS IN HEALTH CARE 
              LAWSUITS.

    (a) Authorization of Payment of Future Damages to Claimants in 
Health Care Lawsuits.--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 accordance with the 
Uniform Periodic Payment of Judgments Act promulgated by the National 
Conference of Commissioners on Uniform State Laws.
    (b) Recovery of Costs; Payment of Award.--In any health care 
lawsuit, the court may 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.
    (c) Applicability.--This section applies to all actions which have 
not been first set for trial or retrial before the effective date of 
this title.
    (d) Statute of Limitations.--
            (1) In general.--Except in the case of a State law that 
        provides for a shorter period of time, the time for the 
        commencement of a health care lawsuit shall be no more than 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--
                    (A) upon proof of fraud;
                    (B) intentional concealment; or
                    (C) the presence of a foreign body, which has no 
                therapeutic or diagnostic purpose or effect, in the 
                person of the injured person.
            (2) Cases involving minors.--Except in the case of a State 
        law that provides for a shorter period of time, 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.
    (e) 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.
    (f) Apologies.--In any health care lawsuit, if a claimant receives 
any expression of regret for any act pertaining to conduct giving rise 
to the health care lawsuit, such expression of regret, notwithstanding 
any applicable rule of evidence may not be admitted into evidence in 
the health care lawsuit.

SEC. 404. 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) Federal tax benefit.--A claimant shall be treated as 
        receiving a Federal tax benefit with respect to payment for 
        items or services if--
                    (A) such payment is compensation by insurance--
                            (i) which constitutes medical care, and
                            (ii) with respect to the payment of 
                        premiums for which the claimant, or the 
                        employer of the claimant, was allowed an 
                        exclusion from gross income, a deduction, or a 
                        credit for Federal income tax purposes,
                    (B) a deduction was allowed with respect to such 
                payment for Federal income tax purposes, or
                    (C) such payment was from an Archer MSA (as defined 
                in section 220(d) of the Internal Revenue Code of 
                1986), a health savings account (as defined in section 
                223(d) of such Code), a flexible spending arrangement 
                (as defined in section 106(c)(2) of such Code), or a 
                health reimbursement arrangement which is treated as 
                employer-provided coverage under an accident or health 
                plan for purposes of section 106 of such Code.
            (4) Health care lawsuit.--The term ``health care lawsuit'' 
        means any health care liability claim concerning the provision 
        of health care goods or services brought in a Federal court or 
        in a State court or pursuant to an alternative dispute 
        resolution system, if such claim concerns items or services for 
        which coverage is provided under title XVIII, XIX, or XXI of 
        the Social Security Act or for which the claimant receives a 
        Federal tax benefit, 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 
        Government; or which is grounded in antitrust.
            (5) 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.
            (6) 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 
        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.
            (7) 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.
            (8) 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.
            (9) 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.
            (10) 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.
            (11) Medical treatment.--The term ``medical treatment'' 
        means the provision of any goods or services by a health care 
        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.
            (12) 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.
            (13) 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. 405. EFFECT ON OTHER LAWS.

    (a) Vaccine Injury.--
            (1) Non-applicability of this title.--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) Applicability of this title.--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. 406. 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 
title, except that any health care lawsuit arising from an injury 
occurring prior to the date of the enactment of this title shall be 
governed by the applicable statute of limitations provisions in effect 
at the time the injury occurred.

                    TITLE V--WELLNESS AND PREVENTION

SEC. 501. PROVIDING FINANCIAL INCENTIVES FOR TREATMENT COMPLIANCE.

    (a) Limitation on Exception for Wellness Programs Under HIPAA 
Discrimination Rules.--
            (1) Employee retirement income security act of 1974 
        amendment.--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 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 (or lack of participation) in 
        a standards-based wellness program.''.
            (2) PHSA amendment.--Section 2702(b)(2) of the Public 
        Health Service Act (42 U.S.C. 300gg-1(b)(2)) is amended by 
        adding after 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 (or lack of participation) in 
        a standards-based wellness program.''.
            (3) IRC amendment.--Section 9802(b)(2) of the Internal 
        Revenue Code of 1986 is amended by adding after subparagraph 
        (B) the following:
        ``In applying subparagraph (B), a group health plan may vary 
        premiums and cost-sharing by up to 50 percent of the value of 
        the benefits under the plan based on participation (or lack of 
        participation) in a standards-based wellness program.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to plan years beginning more than 1 year after the date of the 
enactment of this Act.

          TITLE VI--TRANSPARENCY AND INSURANCE REFORM MEASURES

SEC. 601. RECEIPT AND RESPONSE TO REQUESTS FOR CLAIM INFORMATION.

    (a) In General.--Title XXVII of the Public Health Service Act is 
amended by inserting after section 2713 the following new section:

``SEC. 2714. RECEIPT AND RESPONSE TO REQUESTS FOR CLAIM INFORMATION.

    ``(a) Requirement.--
            ``(1) In general.--In the case of health insurance coverage 
        offered in connection with a group health plan, not later than 
        30 days after the date on which a health insurance issuer 
        receives a written request for a written report of claim 
        information from the plan, plan sponsor, or plan administrator, 
        the health insurance issuer shall provide the requesting party 
        the report, subject to the succeeding provisions of this 
        section.
            ``(2) Exception.--The health insurance issuer is not 
        obligated to provide a report under this subsection regarding a 
        particular employer or group health plan more than twice in any 
        12-month period and is not obligated to provide such a report 
        in the case of an employer with fewer than 50 employees.
            ``(3) Deadline.--A plan, plan sponsor, or plan 
        administrator must request a report under this subsection 
        before or on the second anniversary of the date of termination 
        of coverage under a group health plan issued by the health 
        insurance issuer.
    ``(b) Form of Report; Information To Be Included.--
            ``(1) In general.--A health insurance issuer shall provide 
        the report of claim information under subsection (a)--
                    ``(A) in a written report;
                    ``(B) through an electronic file transmitted by 
                secure electronic mail or a file transfer protocol 
                site; or
                    ``(C) by making the required information available 
                through a secure Internet Web site or Web portal 
                accessible by the requesting plan, plan sponsor, or 
                plan administrator.
            ``(2) Information to be included.--A report of claim 
        information provided under subsection (a) shall contain all 
        information available to the health insurance issuer that is 
        responsive to the request made under such subsection, 
        including, subject to subsection (c), protected health 
        information, for the 3-year period preceding the date of the 
        report or the period specified by subparagraphs (D), (E), and 
        (F) of paragraph (3), if applicable, or for the entire period 
        of coverage, whichever period is shorter.
            ``(3) Required information.--Subject to subsection (c), a 
        report provided under subsection (a) shall include the 
        following:
                    ``(A) Aggregate paid claims experience by month, 
                including claims experience for medical, dental, and 
                pharmacy benefits, as applicable.
                    ``(B) Total premium paid by month.
                    ``(C) Total number of covered employees on a 
                monthly basis by coverage tier, including whether 
                coverage was for--
                            ``(i) an employee only;
                            ``(ii) an employee with dependents only;
                            ``(iii) an employee with a spouse only; or
                            ``(iv) an employee with a spouse and 
                        dependents.
                    ``(D) The total dollar amount of claims pending as 
                of the date of the report.
                    ``(E) A separate description and individual claims 
                report for any individual whose total paid claims 
                exceed $15,000 during the 12-month period preceding the 
                date of the report, including the following information 
                related to the claims for that individual--
                            ``(i) a unique identifying number, 
                        characteristic, or code for the individual;
                            ``(ii) the amounts paid;
                            ``(iii) dates of service; and
                            ``(iv) applicable procedure codes and 
                        diagnosis codes.
                    ``(F) For claims that are not part of the 
                information described in a previous subparagraph, a 
                statement describing precertification requests for 
                hospital stays of 5 days or longer that were made 
                during the 30-day period preceding the date of the 
                report.
    ``(c) Limitations on Disclosure.--
            ``(1) In general.--A health insurance issuer may not 
        disclose protected health information in a report of claim 
        information provided under this section if the health insurance 
        issuer is prohibited from disclosing that information under 
        another State or Federal law that imposes more stringent 
        privacy restrictions than those imposed under Federal law under 
        the HIPAA privacy regulations. To withhold information in 
        accordance with this subsection, the health insurance issuer 
        shall--
                    ``(A) notify the plan, plan sponsor, or plan 
                administrator requesting the report that information is 
                being withheld; and
                    ``(B) provide to the plan, plan sponsor, or plan 
                administrator a list of categories of claim information 
                that the health insurance issuer has determined are 
                subject to the more stringent privacy restrictions 
                under another State or Federal law.
            ``(2) Protection.--A plan sponsor is entitled to receive 
        protected health information under subparagraphs (E) and (F) of 
        subsection (b)(3) and subsection (d) only after an 
        appropriately authorized representative of the plan sponsor 
        makes to the health insurance issuer a certification 
        substantially similar to the following certification: `I hereby 
        certify that the plan documents comply with the requirements of 
        section 164.504(f)(2) of title 45, Code of Federal Regulations, 
        and that the plan sponsor will safeguard and limit the use and 
        disclosure of protected health information that the plan 
        sponsor may receive from the group health plan to perform the 
        plan administration functions.'.
            ``(3) Results.--A plan sponsor that does not provide the 
        certification required by paragraph (2) is not entitled to 
        receive the protected health information described by 
        subparagraphs (E) and (F) of subsection (b)(3) and subsection 
        (d), but is entitled to receive a report of claim information 
        that includes the information described in subparagraphs (A) 
        through (D) of subsection (b)(3).
            ``(4) Information.--In the case of a request made under 
        subsection (a) after the date of termination of coverage, the 
        report shall contain all information available to the health 
        insurance issuer as of the date of the report that is 
        responsive to the request, including protected health 
        information, and including the information described in 
        subsection (b)(3), for the period described in subsection 
        (b)(2) preceding the date of termination of coverage or for the 
        entire policy period, whichever period is shorter. 
        Notwithstanding this subsection, the report may not include the 
        protected health information described in subparagraphs (E) and 
        (F) of subsection (b)(3) unless a certification has been 
        provided in accordance with paragraph (2).
    ``(d) Request for Additional Information.--
            ``(1) Review.--On receipt of the report required by 
        subsection (a), the plan, plan sponsor, or plan administrator 
        may review the report and, not later than 10 days after the 
        date on which the report is received, may make a written 
        request to the health insurance issuer for additional 
        information in accordance with this subsection for specified 
        individuals.
            ``(2) Request.--With respect to a request for additional 
        information concerning specified individuals for whom claims 
        information has been provided under subsection (b)(3)(E), the 
        health insurance issuer shall provide additional information on 
        the prognosis or recovery if available and, for individuals in 
        active case management, the most recent case management 
        information, including any future expected costs and treatment 
        plan, that relate to the claims for that individual.
            ``(3) Response.--The health insurance issuer must respond 
        to the request for additional information under this subsection 
        not later than 15 days after the date of such request unless 
        the requesting plan, plan sponsor, or plan administrator agrees 
        to a request for additional time.
            ``(4) Limitation.--The health insurance issuer is not 
        required to produce the report described by this subsection 
        unless a certification has been provided in accordance with 
        subsection (c)(2).
            ``(5) Compliance with section does not create liability.--A 
        health insurance issuer that releases information, including 
        protected health information, in accordance with this 
        subsection has not violated a standard of care and is not 
        liable for civil damages resulting from, and is not subject to 
        criminal prosecution for, releasing that information.
    ``(e) Limitation on Preemption.--Nothing in this section is meant 
to limit States from enacting additional laws in addition to the 
provisions of this section, but not in lieu of such provisions.
    ``(f) Definitions.--In this section:
            ``(1) The terms `employer', `plan administrator', and `plan 
        sponsor' have the meanings given such terms in section 3 of the 
        Employee Retirement Income Security Act of 1974.
            ``(2) The term `HIPAA privacy regulations' has the meaning 
        given such term in section 1180(b)(3) of the Social Security 
        Act.
            ``(3) The term `protected health information' has the 
        meaning given such term under the HIPAA privacy regulations.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act.

                           TITLE VII--QUALITY

SEC. 701. PROHIBITION ON CERTAIN USES OF DATA OBTAINED FROM COMPARATIVE 
              EFFECTIVENESS RESEARCH OR FROM PATIENT-CENTERED OUTCOMES 
              RESEARCH; ACCOUNTING FOR PERSONALIZED MEDICINE AND 
              DIFFERENCES IN PATIENT TREATMENT RESPONSE.

    (a) In General.--Notwithstanding any other provision of law, the 
Secretary of Health and Human Services--
            (1) shall not use data obtained from the conduct of 
        comparative effectiveness research or patient-centered outcomes 
        research, including such research that is conducted or 
        supported using funds appropriated under the American Recovery 
        and Reinvestment Act of 2009 (Public Law 111-5), to deny 
        coverage of an item or service under a Federal health care 
        program (as defined in section 1128B(f) of the Social Security 
        Act (42 U.S.C. 1320a-7b(f))); and
            (2) shall ensure that comparative effectiveness research 
        and patient-centered outcomes research conducted or supported 
        by the Federal Government accounts for factors contributing to 
        differences in the treatment response and treatment preferences 
        of patients, including patient-reported outcomes, genomics and 
        personalized medicine, the unique needs of health disparity 
        populations, and indirect patient benefits.
    (b) Consultation and Approval Required.--Nothing the Federal 
Coordinating Council for Comparative Effectiveness Research finds can 
be released in final form until after consultation with and approved by 
relevant physician specialty organizations.
    (c) Rule of Construction.--Nothing in this section shall be 
construed as affecting the authority of the Commissioner of Food and 
Drugs under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et 
seq.) or the Public Health Service Act (42 U.S.C. 201 et seq.).

SEC. 702. ESTABLISHMENT OF PERFORMANCE-BASED QUALITY MEASURES.

    Not later than January 1, 2017, the Secretary of Health and Human 
Services shall submit to Congress a proposal for a formalized process 
for the development of performance-based quality measures that could be 
applied to physicians' services under the Medicare program under title 
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.). Such 
proposal shall be in concert and agreement with the Physician 
Consortium for Performance Improvement and shall only utilize measures 
agreed upon by each physician specialty organization.

               TITLE VIII--STATE TRANSPARENCY PLAN PORTAL

SEC. 801. PROVIDING INFORMATION ON HEALTH COVERAGE OPTIONS AND HEALTH 
              CARE PROVIDERS.

    (a) State-Based Portal.--A State (by itself or jointly with other 
States) may contract with a private entity to establish a Health Plan 
and Provider Portal Web site (referred to in this section as a ``plan 
portal'') for the purposes of providing standardized information--
            (1) on health insurance plans that have been certified to 
        be available for purchase in that State; and
            (2) on price and quality information on health care 
        providers (including physicians, hospitals, and other health 
        care institutions).
    (b) Prohibitions.--
            (1) Direct enrollment.--A plan portal may not directly 
        enroll individuals in health insurance plans or under a State 
        Medicaid plan under title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.) or a State child health plan under the 
        State Children's Health Insurance Program established under 
        title XXI of the Social Security Act (42 U.S.C. 1397aa et 
        seq.).
            (2) Conflicts of interest.--
                    (A) Companies.--A health insurance issuer offering 
                a health insurance plan through a plan portal may not--
                            (i) be the private entity developing and 
                        maintaining a plan portal under this section; 
                        or
                            (ii) have an ownership interest in such 
                        private entity or in the plan portal.
                    (B) Individuals.--An individual employed by a 
                health insurance issuer offering a health insurance 
                plan through a plan portal may not serve as a director 
                or officer for--
                            (i) the private entity developing and 
                        maintaining a plan portal under this section; 
                        or
                            (ii) the plan portal.
    (c) Construction.--Nothing in this section shall be construed to 
prohibit health insurance brokers and agents from--
            (1) utilizing the plan portal for any purpose; or
            (2) marketing or offering health insurance products.
    (d) State Defined.--In this section, the term ``State'' has the 
meaning given such term for purposes of title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.).
    (e) Health Insurance Plans.--For purposes of this section, the term 
``health insurance plan'' does not include coverage of excepted 
benefits, as defined in section 2791(c) of the Public Health Service 
Act (42 U.S.C. 300gg-91(c)).

                  TITLE IX--PATIENT FREEDOM OF CHOICE

SEC. 901. GUARANTEEING FREEDOM OF CHOICE AND CONTRACTING FOR PATIENTS 
              UNDER MEDICARE.

    (a) In General.--Section 1802 of the Social Security Act (42 U.S.C. 
1395a) is amended to read as follows:

       ``freedom of choice and contracting by patient guaranteed

    ``Sec. 1802.  (a) Basic Freedom of Choice.--Any individual entitled 
to insurance benefits under this title may obtain health services from 
any institution, agency, or person qualified to participate under this 
title if such institution, agency, or person undertakes to provide that 
individual such services.
    ``(b) Freedom To Contract by Medicare Beneficiaries.--
            ``(1) In general.--Subject to the provisions of this 
        subsection, nothing in this title shall prohibit a Medicare 
        beneficiary from entering into a contract with an eligible 
        professional (whether or not the professional is a 
        participating or non-participating physician or practitioner) 
        for any item or service covered under this title.
            ``(2) Submission of claims.--Any Medicare beneficiary that 
        enters into a contract under this section with an eligible 
        professional shall be permitted to submit a claim for payment 
        under this title for services furnished by such professional, 
        and such payment shall be made in the amount that would 
        otherwise apply to such professional under this title except 
        that where such professional is considered to be non-
        participating, payment shall be paid as if the professional 
        were participating. Payment made under this title for any item 
        or service provided under the contract shall not render the 
        professional a participating or non-participating physician or 
        practitioner, and as such, requirements of this title that may 
        otherwise apply to a participating or non-participating 
        physician or practitioner would not apply with respect to any 
        items or services furnished under the contract.
            ``(3) Beneficiary protections.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                any contract unless--
                            ``(i) the contract is in writing, is signed 
                        by the Medicare beneficiary and the eligible 
                        professional, and establishes all terms of the 
                        contract (including specific payment for items 
                        and services covered by the contract) before 
                        any item or service is provided pursuant to the 
                        contract, and the beneficiary shall be held 
                        harmless for any subsequent payment charged for 
                        an item or service in excess of the amount 
                        established under the contract during the 
                        period the contract is in effect;
                            ``(ii) the contract contains the items 
                        described in subparagraph (B); and
                            ``(iii) the contract is not entered into at 
                        a time when the Medicare beneficiary is facing 
                        an emergency medical condition or urgent health 
                        care situation.
                    ``(B) Items required to be included in contract.--
                Any contract to provide items and services to which 
                paragraph (1) applies shall clearly indicate to the 
                Medicare beneficiary that by signing such contract the 
                beneficiary--
                            ``(i) agrees to be responsible for payment 
                        to such eligible professional for such items or 
                        services under the terms of and amounts 
                        established under the contract;
                            ``(ii) agrees to be responsible for 
                        submitting claims under this title to the 
                        Secretary, and to any other supplemental 
                        insurance plan that may provide supplemental 
                        insurance, for such items or services furnished 
                        under the contract if such items or services 
                        are covered by this title, unless otherwise 
                        provided in the contract under subparagraph 
                        (C)(i); and
                            ``(iii) acknowledges that no limits or 
                        other payment incentives that may otherwise 
                        apply under this title (such as the limits 
                        under subsection (g) of section 1848 or 
                        incentives under subsections (a)(5), (m), (q), 
                        and (p) of such section) shall apply to amounts 
                        that may be charged, or paid to a beneficiary 
                        for, such items or services.
                Such contract shall also clearly indicate whether the 
                eligible professional is excluded from participation 
                under the Medicare program under section 1128.
                    ``(C) Beneficiary elections under the contract.--
                Any Medicare beneficiary that enters into a contract 
                under this section may elect to negotiate, as a term of 
                the contract, a provision under which--
                            ``(i) the eligible professional shall file 
                        claims on behalf of the beneficiary with the 
                        Secretary and any supplemental insurance plan 
                        for items or services furnished under the 
                        contract if such items or services are covered 
                        under this title or under the plan; and
                            ``(ii) the beneficiary assigns payment to 
                        the eligible professional for any claims filed 
                        by, or on behalf of, the beneficiary with the 
                        Secretary and any supplemental insurance plan 
                        for items or services furnished under the 
                        contract.
                    ``(D) Exclusion of dual eligible individuals.--
                Paragraph (1) shall not apply to any contract if a 
                beneficiary who is eligible for medical assistance 
                under title XIX is a party to the contract.
            ``(4) Limitation on actual charge and claim submission 
        requirement not applicable.--Section 1848(g) shall not apply 
        with respect to any item or service provided to a Medicare 
        beneficiary under a contract described in paragraph (1).
            ``(5) Construction.--Nothing in this section shall be 
        construed--
                    ``(A) to prohibit any eligible professional from 
                maintaining an election and acting as a participating 
                or non-participating physician or practitioner with 
                respect to any patient not covered under a contract 
                established under this section; and
                    ``(B) as changing the items and services for which 
                an eligible professional may bill under this title.
            ``(6) Definitions.--In this subsection:
                    ``(A) Medicare beneficiary.--The term `Medicare 
                beneficiary' means an individual who is entitled to 
                benefits under part A or enrolled under part B.
                    ``(B) Eligible professional.--The term `eligible 
                professional' has the meaning given such term in 
                section 1848(k)(3)(B).
                    ``(C) Emergency medical condition.--The term 
                `emergency medical condition' means a medical condition 
                manifesting itself by acute symptoms of sufficient 
                severity (including severe pain) such that a prudent 
                layperson, with an average knowledge of health and 
                medicine, could reasonably expect the absence of 
                immediate medical attention to result in--
                            ``(i) serious jeopardy to the health of the 
                        individual or, in the case of a pregnant woman, 
                        the health of the woman or her unborn child;
                            ``(ii) serious impairment to bodily 
                        functions; or
                            ``(iii) serious dysfunction of any bodily 
                        organ or part.
                    ``(D) Urgent health care situation.--The term 
                `urgent health care situation' means services furnished 
                to an individual who requires services to be furnished 
                within 12 hours in order to avoid the likely onset of 
                an emergency medical condition.''.

SEC. 902. PREEMPTION OF STATE LAWS LIMITING CHARGES FOR ELIGIBLE 
              PROFESSIONAL SERVICES.

    (a) In General.--No State may impose a limit on the amount of 
charges for services, furnished by an eligible professional (as defined 
in subsection (k)(3)(B) of section 1848 of the Social Security Act, 42 
U.S.C. 1395w-4), for which payment is made under such section, and any 
such limit is hereby preempted.
    (b) State.--In this section, the term ``State'' includes the 
District of Columbia, Puerto Rico, the Virgin Islands, Guam, and 
American Samoa.

SEC. 903. HEALTH CARE PROVIDER LICENSURE CANNOT BE CONDITIONED ON 
              PARTICIPATION IN A HEALTH PLAN.

    (a) In General.--The Secretary of Health and Human Services and any 
State (as a condition of receiving Federal financial participation 
under title XIX of the Social Security Act) may not require any health 
care provider to participate in any health plan as a condition of 
licensure of the provider in any State.
    (b) Definitions.--In this section:
            (1) Health plan.--The term ``health plan'' has the meaning 
        given such term in section 1171(5) of the Social Security Act 
        (42 U.S.C. 1320d(5)).
            (2) Health care provider.--The term ``health care 
        provider'' means any person or entity that is required by State 
        or Federal laws or regulations to be licensed, registered, or 
        certified to provide health care services and is so licensed, 
        registered, or certified, or exempted from such requirement by 
        other statute or regulation.
            (3) State.--The term ``State'' has the meaning given such 
        term for purposes of title XIX of the Social Security Act.

SEC. 904. BAD DEBT DEDUCTION FOR DOCTORS TO PARTIALLY OFFSET THE COST 
              OF PROVIDING UNCOMPENSATED CARE REQUIRED TO BE PROVIDED 
              UNDER AMENDMENTS MADE BY THE EMERGENCY MEDICAL TREATMENT 
              AND LABOR ACT.

    (a) In General.--Section 166 of the Internal Revenue Code of 1986 
(relating to bad debts) is amended by redesignating subsection (f) as 
subsection (g) and by inserting after subsection (e) the following new 
subsection:
    ``(f) Bad Debt Treatment for Doctors To Partially Offset Cost of 
Providing Uncompensated Care Required To Be Provided.--
            ``(1) Amount of deduction.--
                    ``(A) In general.--For purposes of subsection (a), 
                the basis for determining the amount of any deduction 
                for an eligible EMTALA debt shall be treated as being 
                equal to the Medicare payment amount.
                    ``(B) Medicare payment amount.--For purposes of 
                subparagraph (A), the Medicare payment amount with 
                respect to an eligible EMTALA debt is the fee schedule 
                amount established under section 1848 of the Social 
                Security Act for the physicians' service (to which such 
                debt relates) as if the service were provided to an 
                individual enrolled under part B of title XVIII of such 
                Act.
            ``(2) Eligible emtala debt.--For purposes of this section, 
        the term `eligible EMTALA debt' means any debt if--
                    ``(A) such debt arose as a result of physicians' 
                services--
                            ``(i) which were performed in an EMTALA 
                        hospital by a board-certified physician 
                        (whether as part of medical screening or 
                        necessary stabilizing treatment and whether as 
                        an emergency department physician, as an on-
                        call physician, or otherwise), and
                            ``(ii) which were required to be provided 
                        under section 1867 of the Social Security Act 
                        (42 U.S.C. 1395dd), and
                    ``(B) such debt is owed--
                            ``(i) to such physician, or
                            ``(ii) to an entity if--
                                    ``(I) such entity is a corporation 
                                and the sole shareholder of such 
                                corporation is such physician, or
                                    ``(II) such entity is a partnership 
                                and any deduction under this subsection 
                                with respect to such debt is allocated 
                                to such physician or to an entity 
                                described in subclause (I).
            ``(3) Board-certified physician.--For purposes of this 
        subsection, the term `board-certified physician' means any 
        physician (as defined in section 1861(r) of the Social Security 
        Act (42 U.S.C. 1395x(r))) who is certified by the American 
        Board of Emergency Medicine or other appropriate medical 
        specialty board for the specialty in which the physician 
        practices, or who meets comparable requirements, as identified 
        by the Secretary of the Treasury in consultation with Secretary 
        of Health and Human Services.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) EMTALA hospital.--The term `EMTALA hospital' 
                means any hospital having a hospital emergency 
                department which is required to comply with section 
                1867 of the Social Security Act (42 U.S.C. 1395dd) 
                (relating to examination and treatment for emergency 
                medical conditions and women in labor).
                    ``(B) Physicians' services.--The term `physicians' 
                services' has the meaning given such term in section 
                1861(q) of the Social Security Act (42 U.S.C. 
                1395x(q)).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to debts arising from services performed in taxable years 
beginning after the date of the enactment of this Act.

SEC. 905. RIGHT OF CONTRACT WITH HEALTH CARE PROVIDERS.

    (a) In General.--The Secretary of Health and Human Services shall 
not preclude an enrollee, participant, or beneficiary in a health 
benefits plan from entering into any contract or arrangement for health 
care with any health care provider.
    (b) Health Benefits Plan Defined.--
            (1) In general.--In this section, subject to paragraph (2), 
        the term ``health benefits plan'' means any of the following:
                    (A) A group health plan (as defined in section 2791 
                of the Public Health Service Act (42 U.S.C. 300g-1)).
                    (B) Health insurance coverage (as defined in 
                section 2791 of such Act (42 U.S.C. 300g-1)).
                    (C) A health benefits plan under chapter 89 of 
                title 5, United States Code.
            (2) Exclusion of medicaid and tricare.--Such term does not 
        include a health plan participating in--
                    (A) the Medicaid program under title XIX of the 
                Social Security Act (42 U.S.C. 1396 et seq.); or
                    (B) the TRICARE program under chapter 55 of title 
                10, United States Code.
    (c) Health Care Provider Defined.--In this section, the term 
``health care provider'' means--
            (1) a physician, as defined in paragraphs (1), (2), (3), 
        and (4) of section 1861(r) of the Social Security Act (42 
        U.S.C. 1395x(r)); and
            (2) a health care practitioner described in section 
        1842(b)(18)(C) of such Act (42 U.S.C. 1395u(b)(18)(C)).

                 TITLE X--QUALITY HEALTH CARE COALITION

SEC. 1001. QUALITY HEALTH CARE COALITION.

    (a) Application of the Federal Antitrust Laws to Health Care 
Professionals Negotiating With Health Plans.--
            (1) In general.--Any health care professionals who are 
        engaged in negotiations with a health plan regarding the terms 
        of any contract under which the professionals provide health 
        care items or services for which benefits are provided under 
        such plan shall, in connection with such negotiations, be 
        exempt from the Federal antitrust laws.
            (2) Limitation.--
                    (A) No new right for collective cessation of 
                service.--The exemption provided in paragraph (1) shall 
                not confer any new right to participate in any 
                collective cessation of service to patients not already 
                permitted by existing law.
                    (B) No change in national labor relations act.--
                This section applies only to health care professionals 
                excluded from the National Labor Relations Act. Nothing 
                in this section shall be construed as changing or 
                amending any provision of the National Labor Relations 
                Act, or as affecting the status of any group of persons 
                under that Act.
            (3) No application to federal programs.--Nothing in this 
        section shall apply to negotiations between health care 
        professionals and health plans pertaining to benefits provided 
        under any of the following:
                    (A) The Medicare program under title XVIII of the 
                Social Security Act (42 U.S.C. 1395 et seq.).
                    (B) The Medicaid program under title XIX of the 
                Social Security Act (42 U.S.C. 1396 et seq.).
                    (C) The State Children's Health Insurance Program 
                under title XXI of the Social Security Act (42 U.S.C. 
                1397aa et seq.).
                    (D) Chapter 55 of title 10, United States Code 
                (relating to medical and dental care for members of the 
                uniformed services).
                    (E) Chapter 17 of title 38, United States Code 
                (relating to Veterans' medical care).
                    (F) Chapter 89 of title 5, United States Code 
                (relating to the Federal Employees Health Benefits 
                program).
                    (G) The Indian Health Care Improvement Act (25 
                U.S.C. 1601 et seq.).
    (b) Definitions.--In this section, the following definitions shall 
apply:
            (1) Antitrust laws.--The term ``antitrust laws''--
                    (A) has the meaning given it in subsection (a) of 
                the first section of the Clayton Act (15 U.S.C. 12(a)), 
                except that such term includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45) to the extent such 
                section applies to unfair methods of competition; and
                    (B) includes any State law similar to the laws 
                referred to in subparagraph (A).
            (2) Group health plan.--The term ``group health plan'' 
        means an employee welfare benefit plan to the extent that the 
        plan provides medical care (including items and services paid 
        for as medical care) to employees or their dependents (as 
        defined under the terms of the plan) directly or through 
        insurance, reimbursement, or otherwise.
            (3) Group health plan, health insurance issuer.--The terms 
        ``group health plan'' and ``health insurance issuer'' include a 
        third-party administrator or other person acting for or on 
        behalf of such plan or issuer.
            (4) Health care services.--The term ``health care 
        services'' means any services for which payment may be made 
        under a health plan, including services related to the delivery 
        or administration of such services.
            (5) Health care professional.--The term ``health care 
        professional'' means any individual or entity that provides 
        health care items or services, treatment, assistance with 
        activities of daily living, or medications to patients and who, 
        to the extent required by State or Federal law, possesses 
        specialized training that confers expertise in the provision of 
        such items or services, treatment, assistance, or medications.
            (6) Health insurance coverage.--The term ``health insurance 
        coverage'' means benefits consisting of medical care (provided 
        directly, through insurance or reimbursement, or otherwise and 
        including items and services paid for as medical care) under 
        any hospital or medical service policy or certificate, hospital 
        or medical service plan contract, or health maintenance 
        organization contract offered by a health insurance issuer.
            (7) Health insurance issuer.--The term ``health insurance 
        issuer'' means an insurance company, insurance service, or 
        insurance organization (including a health maintenance 
        organization) that is licensed to engage in the business of 
        insurance in a State and that is subject to State law 
        regulating insurance. Such term does not include a group health 
        plan.
            (8) Health maintenance organization.--The term ``health 
        maintenance organization'' means--
                    (A) a federally qualified health maintenance 
                organization (as defined in section 1301(a) of the 
                Public Health Service Act (42 U.S.C. 300e(a)));
                    (B) an organization recognized under State law as a 
                health maintenance organization; or
                    (C) a similar organization regulated under State 
                law for solvency in the same manner and to the same 
                extent as such a health maintenance organization.
            (9) Health plan.--The term ``health plan'' means a group 
        health plan or a health insurance issuer that is offering 
        health insurance coverage.
            (10) Medical care.--The term ``medical care'' means amounts 
        paid for--
                    (A) the diagnosis, cure, mitigation, treatment, or 
                prevention of disease, or amounts paid for the purpose 
                of affecting any structure or function of the body; and
                    (B) transportation primarily for and essential to 
                receiving items and services referred to in 
                subparagraph (A).
            (11) Person.--The term ``person'' includes a State or unit 
        of local government.
            (12) State.--The term ``State'' includes the several 
        States, the District of Columbia, Puerto Rico, the Virgin 
        Islands of the United States, Guam, American Samoa, and the 
        Commonwealth of the Northern Mariana Islands.
    (c) Effective Date.--This section shall take effect on the date of 
the enactment of this Act and shall not apply with respect to conduct 
occurring before such date.
                                 <all>