S.Amdt. 3932

1. Rewrites title III

   Replaces

   In S. 1955 · Reported to Senate

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   TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

   SEC. 301. HEALTH INSURANCE STANDARDS HARMONIZATION.

   Title XXIX of the Public Health Service Act (as added by section 201) is amended by adding at the end the following:

   "Subtitle B--Standards Harmonization[inserted: "SEC. 2931. DEFINITIONS.]

   Struck: "SEC. 2931. DEFINITIONS.

   "In this subtitle:

   "(1) Adopting state.--The term 'adopting State' means a State that has enacted the harmonized standards adopted under this subtitle in their entirety and as the exclusive laws of the State that relate to the harmonized standards.

   "(2) Eligible insurer.--The term 'eligible insurer' means a health insurance issuer that is licensed in a nonadopting State and that--

   "(A) notifies the Secretary, not later than 30 days prior to the offering of coverage described in this subparagraph, that the issuer intends to offer health insurance coverage consistent with the harmonized standards in a nonadopting State;

   "(B) notifies the insurance department of a nonadopting State (or other State agency), not later than 30 days prior to the offering of coverage described in this subparagraph, that the issuer intends to offer health insurance coverage in that State consistent with the harmonized standards published pursuant to section [struck: 2932][inserted: 2933](d), and provides with such notice a copy of any insurance policy that it intends to offer in the State, its most recent annual and quarterly financial reports, and any other information required to be filed with the insurance department of the State (or other State agency) by the Secretary in regulations; and

   "(C) includes in the terms of the health insurance coverage offered in nonadopting States (including in the terms of any individual certificates that may be offered to individuals in connection with such health coverage) and filed with the State pursuant to subparagraph (B), a description of the harmonized standards published pursuant to section [struck: 2932][inserted: 2933](g)(2) and an affirmation that such standards are a term of the contract.

   "(3) Harmonized standards.--The term 'harmonized standards' means the standards certified by the Secretary under section [struck: 2932][inserted: 2933](d).

   "(4) Health insurance coverage.--The term 'health insurance coverage' means any coverage issued in the health insurance market, except that such term shall not include excepted benefits (as defined in section 2791(c).

   "(5) Nonadopting state.--The term 'nonadopting State' means a State that fails to enact, within 18 months of the date on which the Secretary certifies the harmonized standards under this subtitle, the harmonized standards in their entirety and as the exclusive laws of the State that relate to the harmonized standards.

   "(6) State law.--The term 'State law' means all laws, decisions, rules, regulations, or other State actions (including actions by a State agency) having the effect of law, of any State.

   Struck: "SEC. 2932. HARMONIZED STANDARDS.

   Inserted: "SEC. 2932. STATE FLEXIBILITY RELATING TO HEALTH INSURANCE LAWS.

   Inserted: "(a) Effectiveness of Subtitle.--

   Inserted: "(1) In general.--The provisions of this subtitle shall take effect unless, not later than 3 years after the date of the enactment of this subtitle, an adequate number of the States (as defined in paragraph (2) have enacted harmonized laws and regulations governing the provision of health insurance within the State.

   Inserted: "(2) Adequate number of the states.--For purposes of paragraph (1), an adequate number of the States is, with respect to the date that is 3 years after the date of enactment of this subtitle, the number of States necessary to ensure that at least 75 percent of the health insurance premium volume of the United States is covered under health insurance coverage to which this subtitle applies.

   Inserted: "(b) Harmonization Required.--States shall be deemed to have enacted harmonized laws and regulations necessary to satisfy subsection (a)(1) if an adequate number of States as provided for in subsection (a)(2) establish harmonized State health insurance laws in those areas and insuch a manner as described in section 2933(b)(1).

   Inserted: "(c) Determination.--

   Inserted: "(1) NAIC determination.--At the end of the 3-year period beginning on the date of the enactment of this subtitle, the National Association of Insurance Commissioners (hereafter in this subtitle referred to as the 'NAIC') shall determine, in consultation with the insurance commissioners or chief insurance regulatory officials of the States, whether the harmonization required by subsection (b) has been achieved.

   Inserted: "(2) Application of harmonized standard under section 2933.--If the NAIC determines under paragraph (1) that the harmonization required under subsection (b) has not occurred, the provisions of section 2933, and the harmonized standards under this section, take effect as provided for in this subtitle.

   Inserted: "(3) Judicial review.--The appropriate United States district court shall have exclusive jurisdiction over any challenge to the NAIC's determination under this section and such court shall apply the standards set forth in section 706 of title 5, United States Code, when reviewing any such challenge.

   Inserted: "(d) Continued Application.--If, at any time, the harmonization required by subsection (b) no longer exists, the provisions of this subtitle shall take effect 2 years after the date on which such harmonization ceases to exist, unless the harmonization required by such subsection is satisfied before the expiration of that 2-year period.

   Inserted: "SEC. 2933. HARMONIZED STANDARDS.

   "(a) Board.--

   "(1) Establishment.--Not later than 3 months after the date of enactment of this title, the Secretary, in consultation with the NAIC, shall establish the Health Insurance Consensus Standards Board (referred to in this subtitle as the 'Board') to develop recommendations that harmonize inconsistent State health insurance laws in accordance with the procedures described in subsection (b).

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   "(2) Composition.--

   "(A) In general.--The Board shall be composed of the following voting members to be appointed by the Secretary after considering the recommendations of professional organizations representing the entities and constituencies described in this paragraph:

   "(i) Four State insurance commissioners as recommended by the National Association of Insurance Commissioners, of which 2 shall be Democrats and 2 shall be Republicans, and of which one shall be designated as the chairperson and one shall be designated as the vice chairperson.

   "(ii) Four representatives of State government, two of which shall be governors of States and two of which shall be State legislators, and two of which shall be Democrats and two of which shall be Republicans.

   "(iii) Four representatives of health insurers, of which one shall represent insurers that offer coverage in the small group market, one shall represent insurers that offer coverage in the large group market, one shall represent insurers that offer coverage in the individual market, and one shall represent carriers operating in a regional market.

   "(iv) Two representatives of insurance agents and brokers.

   "(v) Two independent representatives of the American Academy of Actuaries who have familiarity with the actuarial methods applicable to health insurance.

   "(B) Ex officio member.--A representative of the Secretary shall serve as an ex officio member of the Board.

   "(3) Advisory panel.--The Secretary shall establish an advisory panel to provide advice to the Board, and shall appoint its members after considering the recommendations of professional organizations representing the entities and constituencies identified in this paragraph:

   "(A) Two representatives of small business health plans.

   "(B) Two representatives of employers, of which one shall represent small employers and one shall represent large employers.

   "(C) Two representatives of consumer organizations.

   "(D) Two representatives of health care providers.

   "(4) Qualifications.--The membership of the Board shall include individuals with national recognition for their expertise in health finance and economics, actuarial science, health plans, providers of health services, and other related fields, who provide a mix of different professionals, broad geographic representation, and a balance between urban and rural representatives.

   "(5) Ethical disclosure.--The Secretary shall establish a system for public disclosure by members of the Board of financial and other potential conflicts of interest relating to such members. Members of the Board shall be treated as employees of Congress for purposes of applying title I of the Ethics in Government Act of 1978 (Public Law 95-521).

   "(6) Director and staff.--Subject to such review as the Secretary deems necessary to assure the efficient administration of the Board, the chair and vice-chair of the Board may--

   "(A) employ and fix the compensation of an Executive Director (subject to the approval of the Comptroller General) and such other personnel as may be necessary to carry out its duties (without regard to the provisions of title 5, United States Code, governing appointments in the competitive service);

   "(B) seek such assistance and support as may be required in the performance of its duties from appropriate Federal departments and agencies;

   "(C) enter into contracts or make other arrangements, as may be necessary for the conduct of the work of the Board (without regard to section 3709 of the Revised Statutes (41 U.S.C. 5));

   "(D) make advance, progress, and other payments which relate to the work of the Board;

   "(E) provide transportation and subsistence for persons serving without compensation; and

   "(F) prescribe such rules as it deems necessary with respect to the internal organization and operation of the Board.

   "(7) Terms.--The members of the Board shall serve for the duration of the Board. Vacancies in the Board shall be filled as needed in a manner consistent with the composition described in paragraph (2).

   "(b) Development of Harmonized Standards.--

   "(1) In general.--In accordance with the process described in subsection (c), the Board shall identify and recommend nationally harmonized standards for each of the following process categories:

   "(A) Form filing and rate filing.--Form and rate filing standards shall be established which promote speed to market and include the following defined areas for States that require such filings:

   "(i) Procedures for form and rate filing pursuant to a streamlined administrative filing process.

   "(ii) Timeframes for filings to be reviewed by a State if review is required before they are deemed approved.

   "(iii) Timeframes for an eligible insurer to respond to State requests following its review.

   "(iv) A process for an eligible insurer to self-certify.

   "(v) State development of form and rate filing templates that include only [struck: non- preempted ][inserted: non-preempted ]State law and Federal law requirements for eligible insurers with timely updates.

   "(vi) Procedures for the resubmission of forms and rates.

   "(vii) Disapproval rationale of a form or rate filing based on material omissions or violations of non-preempted State law or Federal law with violations cited and explained.

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   "(viii) For States that may require a hearing, a rationale for hearings based on violations of non-preempted State law or insurer requests.

   "(B) Market conduct review.--Market conduct review standards shall be developed which provide for the following:

   "(i) Mandatory participation in national databases.

   "(ii) The confidentiality of examination materials.

   "(iii) The identification of the State agency with primary responsibility for examinations.

   "(iv) Consultation and verification of complaint data with the eligible insurer prior to State actions.

   "(v) Consistency of reporting requirements with the recordkeeping and administrative practices of the eligible insurer.

   "(vi) Examinations that seek to correct material errors and harmful business practices rather than infrequent errors.

   "(vii) Transparency and publishing of the State's examination standards.

   "(viii) Coordination of market conduct analysis.

   "(ix) Coordination and nonduplication between State examinations of the same eligible insurer.

   "(x) Rationale and protocols to be met before a full examination is conducted.

   "(xi) Requirements on examiners prior to beginning examinations such as budget planning and work plans.

   "(xii) Consideration of methods to limit examiners' fees such as caps, competitive bidding, or other alternatives.

   "(xiii) Reasonable fines and penalties for material errors and harmful business practices.

   "(C) Prompt payment of claims.--The Board shall establish prompt payment standards for eligible insurers based on standards similar to those applicable to the Social Security Act as set forth in section 1842(c)(2) of such Act (42 U.S.C. 1395u(c)(2)). Such prompt payment standards shall be consistent with the timing and notice requirements of the claims procedure rules to be specified under subparagraph (D), and shall include appropriate exceptions such as for fraud, nonpayment of premiums, or late submission of claims.

   "(D) Internal review.--The Board shall establish standards for claims procedures for eligible insurers that are consistent with the requirements relating to initial claims for benefits and appeals of claims for benefits under the Employee Retirement Income Security Act of 1974 as set forth in section 503 of such Act (29 U.S.C. 1133) and the regulations thereunder.

   "(2) Recommendations.--The Board shall recommend harmonized standards for each element of the categories described in subparagraph (A) through (D) of paragraph (1) within each such market. Notwithstanding the previous sentence, the Board shall not recommend any harmonized standards that disrupt, expand, or duplicate the benefit, service, or provider mandate standards provided in the Benefit Choice Standards pursuant to section 2922(a).

   "(c) Process for Identifying Harmonized Standards.--

   "(1) In general.--The Board shall develop recommendations to harmonize inconsistent State insurance laws with respect to each of the process categories described in subparagraphs (A) through (D) of subsection (b)(1).

   "(2) Requirements.--In adopting standards under this section, the Board shall consider the following:

   "(A) Any model acts or regulations of the National Association of Insurance Commissioners in each of the process categories described in subparagraphs (A) through (D) of subsection (b)(1).

   "(B) Substantially similar standards followed by a plurality of States, as reflected in existing State laws, relating to the specific process categories described in subparagraphs (A) through (D) of subsection (b)(1).

   "(C) Any Federal law requirement related to specific process categories described in subparagraphs (A) through (D) of subsection (b)(1).

   "(D) In the case of the adoption of any standard that differs substantially from those referred to in subparagraphs (A), (B), or (C), the Board shall provide evidence to the Secretary that such standard is necessary to protect health insurance consumers or promote speed to market or administrative efficiency.

   "(E) The criteria specified in clauses (i) through (iii) of subsection (d)(2)(B).

   "(d) Recommendations and Certification by Secretary.--

   "(1) Recommendations.--Not later than 18 months after the date on which all members of the Board are selected under subsection (a), the Board shall recommend to the Secretary the certification of the harmonized standards identified pursuant to subsection (c).

   "(2) Certification.--

   "(A) In general.--Not later than 120 days after receipt of the Board's recommendations under paragraph (1), the Secretary shall certify the recommended harmonized standards as provided for in subparagraph (B), and issue such standards in the form of an interim final regulation.

   "(B) Certification process.--The Secretary shall establish a process for certifying the recommended harmonized standard, by category, as recommended by the Board under this section. Such process shall--

   "(i) ensure that the certified standards for a particular process area achieve regulatory harmonization with respect to health plans on a national basis;

   "(ii) ensure that the approved standards are the minimum necessary, with regard to substance and quantity of requirements, to protect health insurance consumers and maintain a competitive regulatory environment; and

   "(iii) ensure that the approved standards will not limit the range of group health plan designs and insurance products, such as catastrophic coverage only plans, health savings accounts, and health maintenance organizations, that might otherwise be available to consumers.

   "(3) [struck: Effective ][inserted: Application and effective ]date.--The standards certified by the Secretary under paragraph (2) shall [struck: be ][inserted: apply and become ]effective on the date [struck: that is 18 months after ][inserted: on which ]the [struck: date on which ][inserted: NAIC makes ]the [struck: Secretary certifies the harmonized standards][inserted: determination described in section 2932(c)(2)].

   "(e) Termination.--The Board shall terminate and be dissolved after making the recommendations to the Secretary pursuant to subsection (d)(1).

   "(f) Ongoing Review.--Not earlier than 3 years after the termination of the Board under subsection (e), and not earlier than every 3 years thereafter, the Secretary, in consultation with the National Association of Insurance Commissioners and the entities and constituencies represented on the Board and the Advisory Panel, shall prepare and submit to the appropriate committees of Congress a report that assesses the effect of the harmonized standards [inserted: applied under this section ]on access, cost, and health insurance market functioning. The Secretary may, based on such report and applying the process established for certification under subsection (d)(2)(B), in consultation with the National Association of Insurance Commissioners and the entities and constituencies represented on the Board and the Advisory Panel, update the harmonized standards through notice and comment rulemaking.

   "(g) Publication.--

   "(1) Listing.--The Secretary shall maintain an up to date listing of all harmonized standards certified under this section on the Internet website of the Department of Health and Human Services.

   "(2) Sample contract language.--The Secretary shall publish on the Internet website of the Department of Health and Human Services sample contract language that incorporates the harmonized standards certified under this section, which may be used by insurers seeking to qualify as an eligible insurer. The types of harmonized standards that shall be included in sample contract language are the standards that are relevant to the contractual bargain between the insurer and insured.

   "(h) State Adoption and Enforcement.--Not later than 18 months after the certification by the Secretary of harmonized standards under this section, the States may adopt such harmonized standards (and become an adopting State) and, in which case, shall enforce the harmonized standards pursuant to State law.

   "SEC. [struck: 2933][inserted: 2934]. APPLICATION AND PREEMPTION.

   "(a) Superceding of State Law.--

   "(1) In general.--The harmonized standards certified under this subtitle [inserted: and applied as provided for in section 2933(d)(3), ]shall supersede any and all State laws of a [struck: non- adopting ][inserted: non-adopting ]State insofar as such State laws relate to the areas of harmonized standards as applied to an eligible insurer, or health insurance coverage issued by a eligible insurer, including with respect to coverage issued to a small business health plan, in a nonadopting State.

   "(2) Nonadopting states.--This subtitle shall supersede any and all State laws of a nonadopting State (whether enacted prior to or after the date of enactment of this title) insofar as they may--

   "(A) prohibit an eligible insurer from offering, marketing, or implementing health insurance coverage consistent with the harmonized standards; or

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   "(B) have the effect of retaliating against or otherwise punishing in any respect an eligible insurer for offering, marketing, or implementing health insurance coverage consistent with the harmonized standards under this subtitle.

   "(b) Savings Clause and Construction.--

   "(1) Nonapplication to adopting states.--Subsection (a) shall not apply with respect to adopting States.

   "(2) Nonapplication to certain insurers.--Subsection (a) shall not apply with respect to insurers that do not qualify as eligible insurers who offer health insurance coverage in a nonadopting State.

   "(3) Nonapplication where obtaining relief under state law.--Subsection (a)(1) shall not supercede any State law of a nonadopting State to the extent necessary to permit individuals or the insurance department of the State (or other State agency) to obtain relief under State law to require an eligible insurer to comply with the harmonized standards under this subtitle.

   "(4) No effect on preemption.--In no case shall this subtitle be construed to limit or affect in any manner the preemptive scope of sections 502 and 514 of the Employee Retirement Income Security Act of 1974. In no case shall this subtitle be construed to create any cause of action under Federal or State law or enlarge or affect any remedy available under the Employee Retirement Income Security Act of 1974.

   "(c) Effective Date.--This section shall apply beginning on the date that is 18 months after the date on harmonized standards are certified by the Secretary under this subtitle.

   "SEC. [struck: 2934][inserted: 2935]. CIVIL ACTIONS AND JURISDICTION.

   "(a) In General.--The district courts of the United States shall have exclusive jurisdiction over civil actions involving the interpretation of this subtitle.

   "(b) Actions.--An eligible insurer may bring an action in the district courts of the United States for injunctive or other equitable relief against any officials or agents of a nonadopting State in connection with any conduct or action, or proposed conduct or action, by such officials or agents which violates, or which would if undertaken violate, section 2933.

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   "(c) Direct Filing in Court of Appeals.--At the election of the eligible insurer, an action may be brought under subsection (b) directly in the United States Court of Appeals for the circuit in which the nonadopting State is located by the filing of a petition for review in such Court.

   "(d) Expedited Review.--

   "(1) District court.--In the case of an action brought in a district court of the United States under subsection (b), such court shall complete such action, including the issuance of a judgment, prior to the end of the 120-day period beginning on the date on which such action is filed, unless all parties to such proceeding agree to an extension of such period.

   "(2) Court of appeals.--In the case of an action brought directly in a United States Court of Appeal under subsection (c), or in the case of an appeal of an action brought in a district court under subsection (b), such Court shall complete all action on the petition, including the issuance of a judgment, prior to the end of the 60-day period beginning on the date on which such petition is filed with the Court, unless all parties to such proceeding agree to an extension of such period.

   "(e) Standard of Review.--A court in an action filed under this section, shall render a judgment based on a review of the merits of all questions presented in such action and shall not defer to any conduct or action, or proposed conduct or action, of a nonadopting State.

   "SEC. [struck: 2935][inserted: 2936]. AUTHORIZATION OF APPROPRIATIONS; RULE OF CONSTRUCTION.

   "(a) Authorization of Appropriations.--There are authorized to be appropriated such sums as may be necessary to carry out this subtitle.

   "(b) Health Savings Accounts.--Nothing in this subtitle shall be construed to [struck: inhibit the development ][inserted: create any mandates for coverage ]of [inserted: any benefits below the deductible levels set for any ]health savings [struck: accounts ][inserted: account-qualified health plan ]pursuant to section 223 of the Internal Revenue Code of 1986.".

   Original wording

   Strike title III and insert the following:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed